Monthly Archives: August 2015

Why a Virginia Corporate Officer May be Held Personally Responsible for Business Taxes?

Certain types of Virginia business taxes (for example sales and employment taxes but not corporate taxes) may be assessed against individual officers of a corporation or of a limited liability company organized in Virginia. Virginia courts use several factors in order to determine whether a particular business person should be held personally liable for business taxes. For example, if an individual was specifically designated as the tax matter partner within a business, prepared and signed tax returns and was aware of the tax delinquencies, there is a good chance that he would be held personally liable for delinquent business taxes.

U.S. Supreme Court Rules on Maryland’s Method of Taxation of Out-of-State Income

In a significant ruling in the area of tax law, the United States Supreme Court has held that Maryland’s method of taxing its residents’ out-of-state income is not constitutional. (Comptroller of Treasury of Maryland v. Wynne, 575 U.S. ____, 2015) Maryland bifurcates the income tax collected from its residents by dividing it into ‘state income tax’ and ‘county income tax’. Maryland residents who pay income tax to another jurisdiction related to income generated in that other state, only get credit for the state portion (but not the county portion) of the tax paid to Maryland. The Court of Appeals of Maryland had previously held that the above taxing system violated the dormant Commerce Clause provision of the U.S.

California District Court Upholds Confidentiality of Advice by Tax Attorney

In May 2015, a district court in California ruled that the IRS could not obtain a corporate taxpayer’s records related to tax advice prepared by the taxpayer’s in-house tax lawyers. United States v. Sanmina Corp., No. 5:15-cv-00092 (2015 U.S. Dist. LEXIS 66123). The court held that the records were protected by the attorney-client confidentiality rules and that the IRS had not shown that the taxpayer had waived the attorney-client privilege. The court stated “the memoranda constituted tax advice from lawyers to Sanmina—not merely preparation of tax returns or number crunching…Both memos contain legal analysis, were prepared by Sanmina’s tax department lawyers,