July 12, 2010
Court Rules That Individual and Single-Member LLC Are not Distinct Taxpayers
Filed under: News
Vision Payroll

In Medical Practice Solutions, LLC, et al., v. Commissioner, TC Memo 2010-98, the Tax Court ruled that an individual and her single-member LLC are not distinct taxpayers and thus she is personally liable for unpaid payroll taxes assessed against the LLC. Carolyn Britton was the sole member of Medical Practice Solutions, LLC (the LLC) in Beverly, Massachusetts. The Internal Revenue Service (IRS) assessed liabilities for unpaid employment taxes reported by the LLC on three different Forms 941. The IRS proceeded with collection proceedings against Ms. Britton when it was unable to collect the taxes from the LLC. According to the Tax Court, “Ms. Britton [made] several related arguments that [challenged] her liability, and they all [rested] on her insistence that she and the LLC [were] distinct taxpayers with distinct liabilities and the right to distinct notices and filings. This premise, however, is flawed both as a matter of law and as a matter of fact.” The court ruled that Ms. Britton and the LLC were a single taxpayer and she was personally responsible for the unpaid taxes. Vision Payroll recommends taxpayers review their rights and responsibilities as LLC members with their attorney to help ensure compliance with tax laws.


Submit a Comment

From New Hire to Payroll
With the Click of Button

Streamline Your Hiring
Process With

Tips / Latest News