State Tax Day - Current, S.5, New York—Sales and Use Tax: Member of LLC Personally Liable for Unpaid Taxes Regardless of Ownership Percentage, (Jun 22, 2026)

An individual that held a 22% ownership interest in a limited liability company was a person required to collect and remit New York sales tax so that he was personally liable for the sales tax due from the LLC. The taxpayer’s argument that his liability should have been reduced to 22% was rejected. During the period at issue, the Tax Law contained no factors to qualify or limit the liability imposed on members of partnerships or LLCs and imposed per se liability upon such members. Thus, for the period at issue, as a member of the LLC, the taxpayer was strictly liable for its tax liabilities. The taxpayer’s argument that his liability should have been reduced to 22% was without merit. Specifically, the taxpayer cited to Tax Law §1133(a)(2) to support his argument that his liability should have been reduced to reflect his ownership interest in the company. However, the taxpayer failed to disclose that subsection (2) of Tax Law §1133(a) was not in effect for the period at issue (it was not in effect until after the period at issue and was subsequently repealed) and the taxpayer presented no argument that such law should have been applied retroactively. Also, any such retroactive application was unwarranted here because the plain language of the statute did not call for such retroactive application. In addition, the taxpayer’s argument that penalties should be abated because of a medical condition was rejected because the taxpayer merely disregarded his duties and, thus, failed to establish reasonable cause and the lack of willful neglect.

Nilva, New York Division of Tax Appeals, DTA Nos. 850525, 850526, 850527, and 850528, June 11, 2026, ¶410-499