California Responsible Person Liability Defense

Understanding “Responsible Person Liability” in California

California law allows the CDTFA to hold individuals personally responsible for a business’s unpaid sales and use taxes when that business closes or fails to pay. This process is called a dual determination and is authorized under Revenue and Taxation Code section 6829.

Under this law, the state can issue a second assessment—naming you personally—for the business’s unpaid tax balance. It doesn’t matter that you weren’t the owner or that the company is a separate legal entity. If the CDTFA decides you were a “responsible person,” you can be forced to pay the full amount yourself, including interest and penalties.

The definition of “responsible person” is intentionally broad. It includes:

• Corporate officers, directors, and LLC managers
• Employees who signed checks or approved payments
• Controllers, accountants, or bookkeepers who handled tax filings
• Non-owners who directed how funds were spent

Once assessed, your personal bank accounts, wages, and property become targets for collection. The CDTFA can record liens, levy accounts, garnish wages, and even intercept state tax refunds.

That’s why this site exists — to help you understand your exposure before the state turns your company’s problem into your personal nightmare.

Why ResponsiblePersonLiability.com Exists

After years of handling CDTFA cases, I saw the same scenario unfold again and again:
A business struggles with cash flow, delays paying sales tax, then closes. Months later, the former officers and employees start getting calls and letters from state tax collectors.

Most people have no idea they can even be held personally liable. Many wait too long to respond. By the time they realize the seriousness of it, a Notice of Determination has already been issued in their name. At that point, the state can begin collection immediately.

ResponsiblePersonLiability.com was created to reach those individuals sooner — before the CDTFA makes its move. This site isn’t just about legal theory; it’s about real-world protection. My goal is to help you understand how the system works, identify your risk, and take action before your personal finances are at stake.

How I Help

I provide two levels of service, depending on your situation:

1. Express Consultation

A focused, one-hour consultation designed for non-owner officers, managers, or employees who think they might be exposed but haven’t yet been personally targeted.
We’ll review your role, your company’s tax status, and what steps you can take now to reduce your risk. You’ll walk away understanding exactly what “responsible person liability” means for you, what records to preserve, and what to avoid saying to collectors.

2. Comprehensive Representation

If the CDTFA or Office of Finance has already contacted you, I offer full legal representation.
This includes:

• Handling all communications with tax agents and investigators
• Responding to Notices of Proposed Determination and Notices of Determination
• Asserting defenses to “responsible person” status or “willfulness”
• Managing appeals before the Office of Tax Appeals
• Negotiating payment plans or offers in compromise when necessary

Every case is different, but the goal is the same: protect your personal assets and resolve the liability efficiently.

How Personal Liability Develops

When a business terminates or closes with unpaid sales or use taxes, a CDTFA collector is assigned to the account. They review the business’s filings, identify officers, and send out questionnaires asking who handled finances and tax compliance.

If you receive one of those questionnaires—or a Notice of Proposed Determination—you are already under investigation. From there, the CDTFA must prove four things to hold you personally liable:

1. The business has closed or ceased operations.
2. Sales or use tax was owed and remains unpaid.
3. You had control or supervision over tax reporting or payment.
4. You willfully failed to pay or directed others not to.

If even one of these elements cannot be proven, you can defeat or reduce the assessment.

That’s why the right legal strategy matters. The sooner you act, the more leverage you have.

Common Mistakes That Trigger Personal Liability

After years of defending clients in these cases, I’ve seen a clear pattern of mistakes that lead to personal financial exposure:

• Using sales tax funds as operating capital. Once that money is spent, the CDTFA views it as theft of public funds.
• Relying on the corporate entity for protection. California law pierces the corporate veil for sales tax liabilities.
• Delegating tax duties without oversight. “My accountant handled it” is not a defense.
• Ignoring collection notices. A short window (often 15 days) is all you get before the liability becomes final.
• Transferring assets or reopening under a new entity. The CDTFA sees through shell transfers and treats them as fraud.

Avoiding these traps can save you from years of personal financial stress.

Why the Cannabis Industry Faces Higher Risk

Cannabis businesses in California operate under tighter margins, heavier regulation, and higher effective tax rates than almost any other sector. These conditions make them prime targets for CDTFA enforcement.

Because many cannabis companies handle large cash transactions, maintain multiple bank accounts, or rely on third-party accountants, the CDTFA often finds gaps in their records and quickly assumes willfulness.

Even if you were a non-owner manager or compliance officer, you can still be named as a “responsible person” if you signed checks, directed payments, or approved expenditures that should have gone to taxes.

I’ve represented numerous cannabis executives and employees who were shocked to discover they were personally on the hook for hundreds of thousands of dollars in unpaid sales tax. My deep experience in both cannabis law and tax enforcement helps me spot risks early and mount defenses that reflect the industry’s realities.

A Practical, Action-Driven Approach

I believe in practical, clear strategies—not theory or scare tactics. My approach focuses on results:

• Minimize your exposure. Limit the time periods and amounts connected to your name.
• Protect your assets. Prevent liens, garnishments, and levies.
• Resolve disputes quickly. Move from investigation to closure as efficiently as possible.

In many cases, we can challenge the state’s evidence, show lack of control, or prove absence of willfulness. In others, we negotiate payment plans or settlements to stop collections before they escalate.

No two cases are identical, but every client deserves a defense that’s proactive, strategic, and grounded in real-world experience.

What You Should Do Right Now

If you’ve received a CDTFA notice or even suspect your company owes unpaid sales or use tax:

1. Do not ignore it. The state interprets silence as guilt.
2. Do not talk to collectors directly. Anything you say can be used against you.
3. Gather your records. Bank statements, job descriptions, and resignation letters are key evidence.
4. Seek legal advice immediately. Even one consultation can protect you from irreversible mistakes.

Once a Notice of Determination becomes final, the CDTFA can legally seize your assets, garnish wages, and record liens. Acting quickly is the difference between prevention and crisis.

Why This Matters

California’s tax enforcement system is designed to collect, not to forgive. And when businesses close, the state looks for individuals to hold accountable.

The problem isn’t limited to cannabis—it affects every industry. Whether you ran a small retail store, a construction company, or a tech startup, the CDTFA can use the same laws to reach your personal assets.

That’s why understanding responsible person liability is critical. It’s not just about taxes—it’s about protecting your livelihood, your savings, and your family’s future.

A Final Word

I built ResponsiblePersonLiability.com to give individuals like you a fighting chance. I’ve seen what happens when good people ignore CDTFA letters or assume the system is fair. It isn’t.

My mission is simple:

• Help you understand the risk.
• Protect your personal assets.
• Guide you through the process with honesty and urgency.

If you’re facing—or fear you might face—personal liability for a company’s unpaid taxes, contact me today. The sooner you act, the more options you’ll have to protect yourself.