What Is a Dual Determination?

What Is a Dual Determination? So a dual determination happens when you have a situation with a business that either accrues payroll tax liability or sales tax liability and what happens in that case is when you have a payroll tax or sales tax liability with the business the state or the IRS can hold the officers of the company responsible personally if they did not pay those taxes so there's certain taxes that we refer to as trust fund taxes and those are monies that are held in trust for the benefit of somebody else so a common example of this has to do with payroll taxes when you don't pay payroll taxes? there's a portion of those payroll taxes that are the employers responsibility but there's also a portion which are the employees responsibility so for the employees portion of those taxes the government can hold you responsible for that so what a dual determination really hinges on is who is responsible for the non-payment of taxes whether they were they had knowledge or whether they were aware of the fact that taxes weren't getting paid and whether they could have done something to pay those taxes so generally speaking if you are aware of a liability and you chose to pay other creditors that warrant the government they're going to hold you liable for so the dual determination process is a very strategic one because and we have a company when you have a situation where you have multiple officers.

The the state or the feds tend to cast a pretty wide net they'll just loop everybody and they don't care who the SS because it's just more avenues for them to attack and try and get money so when you have a situation where you to have unpaid payroll taxes or unpaid sales taxes you want to plan this out strategically and we actually start planning these things out at the beginning of a collections case so we go walk into a situation and we realize that there's a business with with multiple years of unpaid tax liability even multiple quarters of unpaid payroll taxes then what we'll do is we'll start looking at the analysis from what's going to happen if this goes for and if there's a dual determination who's the responsible officer how are we gonna get out of this when we negotiate a strategy for paying off payroll taxes we think about the consequences of the individuals that may or may not happen later and by the way we do this during audits we do this for a variety of processes because when you have a business and there's the potential for the officers to be held responsible for the taxes you have to go through the whole staffs so when there's a dual determination just know that if there's knowledge and there's willfulness or if there's the opportunity that they could have had to pay the taxes and they didn't there's the potential for a dual determination you.


Sam Brotman, JD, LLM, MBA

Owner and Director of Legal
Brotman Law