In May of 2007, the second circuit ruled in the McNamee v. IRS case that a single member of an LLC was personally liable for the employment taxes owed by the single member LLC that was taxed as a disregarded entity for federal tax purposes.
The court specifically states that the personal liability existed because the LLC did not elect to be taxed as a corporation.
This is an important ruling for those single owner LLC businesses that plan on having employees. It may be worthwhile for those single member limited liability companies who have or intend to have employees to consider electing S corporation tax status to protect against this personal liability.
Please note that the IRS can still find members liable if those members had the responsibility of filing those taxes and were negligent.
Taxes involve one area you want to be sure are properly being reported and paid.
