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Officers, Directors and Trustees - Part 1

• Can the officers and directors of a church or other nonprofit organization be personally liable for the amount of payroll taxes that are not withheld or paid over to the government? Yes, concluded a federal district court in New York in a significant ruling. A church-operated charitable organization failed to pay over to the IRS withheld income taxes and the employer's and employees' share of FICA taxes for a number of quarters in both 1984 and 1985. Accordingly, the IRS assessed a penalty in the amount of 100% of the unpaid taxes ($230,245.86) against each of the four officers of the organization pursuant to section 6672 of the Internal Revenue Code, which specifies that "any person required to collect … and pay over any [FICA or income] tax who willfully fails to collect such tax … or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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  • November 1, 1989

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