Employers who are tasked with complying with the U.S. tax system, already one of the world's most complicated and onerous, may now be looked upon as collection agents for the IRS.

In a recently issued opinion (U.S. v. Heli USA Airways, Inc.), a district court determined that an employer is liable for an employee's unpaid taxes and penalties that IRS sought to collect via a third-party levy served on, but ignored by, the employer's chief financial officer.

In the case, an employee of the taxpayer owed federal incomes taxes and penalties for years 1999 through 2003. IRS issued a notice of levy to the taxpayer with respect to the employee's wages. The levy required taxpayer to pay all employee wages to the IRS. The notice was sent to the attention of taxpayer's CFO via U.S. mail. After the initial notice was ignored, the IRS issued a second notice to the taxpayer's CFO, which was also ignored.

The taxpayer's CFO left the company, after which the taxpayer discovered the notice of levy. IRS filed a complaint against taxpayer for failing to honor the wage levy asserting that taxpayer was liable for the employee's unpaid taxes and penalties.

The court agreed with IRS that the taxpayer was liable for employee's unpaid taxes and penalties.

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Founded in 1953, Green Hasson Janks is a Los Angeles-based accounting firm that specializes in nonprofit, food and beverage, entertainment and media and health and wellness companies. Recipient of the Los Angeles Chamber of Commerce 2018 Employee Champion For Life Work Harmony Award and named a…Learn More