Q: I have $330k CDTFA tax debt on failed during COVID S Corp. Am I personally responsible?

A: You can be held liable for the tax debt, and it appears that the CDTFA may have already made a dual determination if they placed a lien on your house.

A dual determination holds a person liable for a tax obligation shared with another, here, the corporation.

Under Revenue and Taxation Code Section 6829, a corporate officer or responsible person may be personally liable for the corporation's tax debt if specific conditions are met.

You may have a remedy under the law, such as an offer in compromise, but that will require a careful analysis of the totality of the circumstances and your current finances.

A: A person may be held personally liable for a business’ unpaid sales tax if the elements of California Revenue & Taxation Code (RTC) § 6829 and Regulation § 1702 are met. Section 6829 requires that the person subject to dual responsibility for the taxes is both a “responsible person” and “willful” as to the nonpayment of taxes.

There are multiple options available in dealing with the liability.

A: In California, you may be held personally responsible for unpaid sales and use tax liabilities, even if the business was an S Corp. The CDTFA (California Department of Tax and Fee Administration) has the authority to pursue individuals who were officers, owners, or responsible parties of the business. As a 25% owner and officer, you could be seen as a responsible party for the tax debt.

Filing for personal Chapter 7 bankruptcy may not discharge certain tax debts, especially if they are classified as trust fund taxes, such as sales tax collected from customers. The CDTFA can file a lien against your personal assets, including your home, to collect the unpaid tax debt. The lien indicates their intention to recover the funds, and it will remain on your property until the debt is paid or otherwise resolved.

It may be possible to explore options like negotiating a payment plan, applying for an offer in compromise, or seeking additional legal advice on the specific nature of your liability. The lien on your home adds urgency to resolving the debt, so taking action soon could help protect your assets.