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6.27.14 graphic KJR Officers Directors and Certain Volunteers at not for profits beware of ides liability M0718019xA6406

By: Kevin J. Richter

In a little known law change, effective the 1st quarter of 2012, the Illinois Department of Employment Security (“IDES”) is now able to charge responsible officers or employees with personal liability for amounts due the IDES. Personal liability extends to any officer or employee of an employer who has control, supervision, or responsibility for the filing of reports or the payment of contributions, payments in lieu of contributions, penalties or interest from the employer and who wilfully fails to file the reports or make the payment.

These personal liability provisions have been interpreted very broadly by the courts for other sections of tax liability. The Department has stated explicitly that they would be looking to corporate officers and other responsible individuals for payment and, if such payments are not made, liens on homes, autos, boats and other property and levies on personal bank accounts may follow. Those individuals that work for Not For Profits or volunteer to assist a Not For Profit in filing returns or provide their expertise to the operation of a Not For Profit should be particularly aware of their exposure to these personal liability assessments. In many instances, reports may be filed in good faith and when subsequently audited additional liabilities may be discovered for a variety of reasons. If a Not For Profit is unable to raise the funds to cover the tax liabilities, then the individual officers, employees and volunteers are responsible and may be looked at for personal liability. If you are in a position that may have exposure to this personal liability, it would be important to evaluate your continued exposure or determine a means to protect your personal exposure.

Professional Services Disclaimer: Please note that the information presented here is as an educational service, and while it contains information about legal issues, it is not legal advice. No warranty is made regarding the applicability of the information presented to a particular client situation, and the information set forth is not a substitute for original legal research, analysis and drafting for a particular client situation.