One of the most significant benefits of a Limited Liability Company (LLC) is limited liability for its members, so long as proper formalities and similar requirements are followed. However, New York Tax Law §1131(1) provides an exception for certain “persons required to collect tax” pursuant to which personal liability can be imposed for New York sales taxes that were or should have been collected by an LLC but are not paid over to the state.
The statute’s treatment of corporate officers and employees generally follows the federal “responsible person” guidelines. However, the definition in §1131(1) also refers to “any member of a partnership or limited liability company,” without explicitly stating any requirements concerning the person’s involvement (or lack thereof) similar to those listed for corporate officers and employees. A strict reading of the statute would conclude that any member of an LLC or partnership is per se liable for unpaid sales tax plus interest and penalties.1
Limited Partners
