Back Sales Taxes Owed by LLC or its Members?

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    Christopher Carmona

    Hello everyone, I’m kinda new to this. I have a potential client out of San Diego that operates a night club. The entity is an LLC with a few members and may have to shut it doors due to slow business. That being said, they owe back sales taxes and would not be able to pay them.

    I searched the forum, website, and podcasts for some guidance on how to even begin this process but I am unable to find any information (It could be me because I’m new). I did find information on Payroll Taxes which are considered “in trust” but I’m not sure if sales taxes are the same animal.

    Does anybody have any insight on how to start this process, are the members liable or just the entity, etc?

    Thank you in advance.



    Sales taxes are also trust taxes, just owed to the state. I would start with CA and see how they handle delinquent sales taxes. I had a similar situation in PA with an S Corp, except it was active and my tax client. I contacted the state and they said to file the returns and they would want payment, but the client could probably drag it out 6-9 months. My client could not pay it in 6-9 months and PA does not easily offer payment plans in general. I ended up referring it to a tax attorney and he told the client to file the returns and he would assist when the notices came.
    So I would start by contacting the state and seeing their policy on back sales tax. I don’t know if they can come after the partners like they can with payroll tax.

    Sorry if this was not helpful. Post what happens though. I would like to learn.

    James Wade


    I suspect that anyone who has responsibility in the LLC for paying over taxes will be held personally responsible. That is the general rule here in Maine and it follows Federal trust fund tax rules.

    While you are at it, make sure you know who you represent to avoid any conflicts of interest. You didn’t say how much is owed but if it is a lot than you can bet the LLC members are going to start pointing fingers at each other.

    Good luck,


    Eric Green

    Chris, I agree with the comments above. sales tax is a trust tax and the owners will be personally responsible. It would be good if the LLC members could get into agreement on this, but be prepared for the finger pointing to start. If it does then you need to have them each go and get their own representation. Otherwise they should shut down, file the final returns, and prepare for the individual collection to start.

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