It was determined in a recent court case that the IRS cannot collect back payroll taxes from a business owner’s father, at least in this case.
The father, who informally helped out at a restaurant that was owned by his son, took it upon himself to sign four checks to suppliers and others while the younger man was out of town.
IRS claimed this action made the dad equally responsible for the firm’s overdue employment taxes.
But he was not an officer or even an employee of the firm. Nor was he an authorized signatory on its bank account (if the bank cleared the checks this could be a legal issue for them).
But he also had no involvement in the hiring or firing of employees, payment of taxes or the company’s financial decisions. So he could not be made liable for the taxes.
Shaffran, TC Memo. 2017-35