In Shotwell v. Department of Treasury
, the Michigan Court of Appeals narrowly interpreted § 27a(5) of MCL 205.1 et seq
. to maintain that a de facto officer of a corporation may not be held personally liable for tax assessments issued prior to that individual officially assuming a corporate officer position.
Pursuant to MCL 205.421 et seq
., an out-of-state tobacco manufacturer that sells tobacco in Michigan must pay taxes under Michigan’s Tobacco Products Tax Act (TPTA). When 2014 PA 3 became effective on February 6 of 2014, it modified § 27(5) of Michigan’s revenue collection act by adding § 27a(14), establishing that assessments issued to “responsible persons” prior to January 1, 2014 under the TPTA would be retroactively effective.
In this case, a Kentucky district court gave control of People’s True Taste (PTT) tobacco company to Deena Shotwell and her daughter, Suzanne, in April of 2007 after Deena’s husband and owner of PTT, William Shotwell, died intestate in March of 2007. Though neither Deena nor Suzanne were corporate officers of PTT, both were given the power to act on behalf of the company and conducted official business for PTT. They often signed documents as “president,” “principal officer,” or “chief accounting officer,” but neither were officially appointed officers until October 29, 2010. Between May 1, 2007 and October 29, 2010, the Department of Treasury issued several assessments to PTT due to deficient tax payments. PTT made partial payments on some of the assessments, but failed to pay the assessments in full. The Department of Treasury asserted that the Shotwells were personally liable for the delinquent taxes pursuant to § 27(5) of MCL 205.1 et seq.
because the Shotwells were acting as “responsible persons,” and the assessments were issued prior to January 1, 2014.
The Court found that the Shotwells could not be held personally liable under the law because, although the amended statute does apply retroactively, the Shotwells were not corporate officers at the time of issuance. Section 27a(15)(b) defines “responsible person” as it is used in § 27(a)5 as “an officer, member, manager . . . or partner” of the corporation to which the assessment is issued. Although the Shotwells were acting as de facto officers, the Court held they were not actual “responsible persons.” Other state statutes do recognize a de facto status, so the absence of such language in this statute indicates that the legislature intends that only properly established officers be held personally liable under the statute.