Am I personally responsible/liable for corporate payroll taxes.

I hold 30 in equity/shares of a small healthcare services company. I was
contacted by the CEO and told I am responsible for paying 30 of the corporate
payroll taxes for 2017 and she is demanding 40k. As I understand I am not liable
for S-Corp taxes except those which are passthrough from profits.

Asked on March 28, 2018 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

That is correct: a shareholder (someone who owns 30% of a corporation, C- or S-) is NOT personally liable for payroll taxes. Those taxes are paid by the corporation, prior to any profits or dividends being distributed to the shareholders.
If the taxes are NOT paid by the corporation and it cannot pay them (e.g. due to insolvency or embezzlemen of the tax payments), then the officer of the corporation who was responsible for managing the taxes (usually a CFO or controller) can be held personally liable for them. But this is only the person who'd been responsible for them, and only if the company does not and cannot pay them.

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