RESPONSIBLE PERSON ASSESSMENTS: What You Need to Know
The collection and remittance of sales and use taxes are critical responsibilities for businesses. When these taxes are not correctly collected and remitted, it can lead to significant issues, including a Responsible Person Assessment (RPA).
An RPA is a legal process where the government can assess an individual for the amount of taxes a business cannot pay. This process can lead to a lien on the person’s house, the seizure of bank accounts, and wage garnishment. This legal action is taken because of the company’s failure to charge customers for sales and use tax. While this may seem unfair, it is the law in many states.
To be considered a responsible person, an individual must have had the authority and responsibility to ensure the collection and remittance of applicable sales and use taxes. The government generally assumes anyone remotely involved in the sales and use tax reporting process is a responsible person. However, this assumption is not always correct, and the government may overreach in its actions.
If you receive an RPA, it is essential to seek legal advice immediately. It is crucial to understand your rights and obligations in this situation. A tax professional can help you navigate the process and develop a strategy to protect your interests.
One way to avoid an RPA is to implement a system to ensure sales and use taxes are correctly collected and remitted. Companies can also seek assistance from tax professionals who can provide guidance on compliance and reporting requirements. Implementing a system of checks and balances can help ensure that all parties involved in the sales and use tax process are following the correct procedures.
If you do receive an RPA, you should respond promptly and accurately to all inquiries from the government. Failure to respond or provide accurate information can lead to additional legal action.
It is also essential to note that the government offers options for resolving RPAs, including installment agreements and offers in compromise. An installment agreement allows you to pay the tax debt over time, while an offer in compromise allows you to settle the tax debt for less than the total amount owed.
In conclusion, an RPA is a serious legal matter that can have significant consequences. It is essential to understand your responsibilities and seek professional guidance to ensure compliance with sales and use tax regulations. If you do receive an RPA, it is critical to seek legal advice immediately and respond promptly and accurately to all inquiries from the government. Remember, there are options available for resolving RPAs, and a tax professional can help you explore these options and develop a strategy to protect your interests.