Tax Procedure: A Minority Shareholder Is Responsible For Corporate Taxes Following the Majority Shareholders’ Fraud

Transferee liabilityWilliam Kardash was a minority shareholder in a Florida company involved in the construction industry; the majority shareholders were skimming cash from the company, apparently without his knowledge or complicity. Kardash wound up with a significant tax bill for the company’s taxes, as the Eleventh Circuit ruled that he was liable as a transferee under section 6901 of the Internal Revenue Code and applicable state law. Kardash v. Comm’r, No. 16-14254, 2017 U.S. App. LEXIS 14389 (11th Cir. Aug. 4, 2017).

Transferee liability represents one of several theories that the IRS can use to hold one person liable for another person’s taxes.… Read More