Tax News

CCH (cch.taxgroup.com) reports:

A corporate officer was held jointly and severally liable along with the corporation for expenses and administrative fees incurred by the State of Texas in cleaning up an abandoned salt water disposal facility because the corporation had forfeited its corporate privileges when it failed to pay its franchise taxes.
Under section 171.255(a) of the Texas Tax Code, a corporation forfeits all corporate privileges and its corporate charter if it fails to pay taxes due. Furthermore, each director or officer of the corporation is liable for each debt of the corporation that is created or incurred after the date on which the tax, or penalty is due and before the corporate privileges are revived.
In this case, the corporation failed to pay its franchise taxes and its privileges were never revived. Following the forfeiture of the corporation's charter, the State used its own funds to clean the abandoned oil and gas waste sites. The court ruled that the State was entitled to have its cleanup costs reimbursed by the responsible party. Although the taxpayer argued that he was not an officer or director of the now defunct corporation at the time that the cleanup expenses were incurred and when the administrative penalties were assessed, evidence was produced that demonstrated otherwise.
Martin v. The State of Texas , Texas Court of Appeals, Third District, No. 03-05-00810-CV, August 3, 2007, ¶403-294
Other References:
Explanations at ¶89-206