Business Owners and Managers Can be Personally Responsible for Nevada Taxes

Business owners and key employees may have a personal stake in how their companies handle state tax issues. Most businesses are unaware of the 2005 change in the liability of employees and principals for a business’ failure to pay taxes. This change did not receive widespread attention despite its unprecedented imposition of shared liability on owners and employees for mere failures to pay taxes—regardless of whether they intended to evade taxes or simply made mistakes. Because the Department of Taxation can now pierce the protections normally provided by a business entity and collect taxes and penalties from individuals, it may be appropriate for owners and key employees to take a fresh look at whether businesses they own or manage should rigorously review tax compliance—if only for their own sakes.

As you may have experienced already, the Nevada Department of Taxation is becoming increasingly aggressive. You may be aware of colleagues who are concerned whether they have underreported; this may be an appropriate time to revisit their tax planning. The statute of limitations on returns is generally six years, but if the Department can claim deliberate underreporting, the Department can reach back as far as they choose.