In re Jonas , 70 N.C. App. 116 ( 1984 )

PHILLIPS, Judge.

The North Carolina Administrative Procedure Act, G.S. 150A-1, et seq., governed the review of this case by the Superior Court. In reversing the decision of the Tax Review Board, Judge Britt concluded that the decision was “affected with error of law and not supported by substantial evidence in view of the entire record”; each of which is a good ground under G.S. 150A-51 for reversing an agency decision.

In working from that starting point, we must first determine whether the Secretary was authorized by G.S. 105-253 to assess respondent personally with the taxes owed by the corporation. This statute at that time, in pertinent part, provided:

§ 105-253. Personal liability of officers, trustees, or receivers. — Any officer, trustee, or receiver of any corporation required to file report with the Secretary of Revenue, having in his custody funds of the corporation, who allows said funds to be paid out or distributed to the stockholders of said corporation without having satisfied the Secretary of Revenue for any State taxes which are due and have accrued, shall be personally responsible for the payment of said tax, and in addition thereto shall be subject to a penalty of not more than the amount of the tax, nor less than twenty-five percent (25%) of such tax found to be due or accrued.

Each responsible corporate officer is made personally and individually liable:

(1) For all sales and use taxes collected by a corporation upon taxable transactions of the corporation, which liability shall be satisfied upon timely remittance of such taxes to the Secretary by the corporation; and

(2) For all sales and use taxes due upon taxable transactions of the corporation but upon which the corporation failed to collect the tax, but only if the responsible officer knew, or in the exercise of reasonable care should have known, that the tax was not being collected.

His liability shall be satisfied upon timely remittance of such tax to the Secretary by the corporation. If said tax shall remain unpaid by the corporation, after the same is due and payable, the Secretary of Revenue may assess the tax against, and collect the tax from, any responsible corporate officer in accordance with the provisions of G.S. 105-241.1, which officer shall be the “taxpayer” in such case, as referred to in G.S. 105-241.1 et seq. As used in this section, the words “responsible corporate officers” mean the president and the treasurer of a corporation and may include such other officers as have been assigned the duty of filing tax returns and remitting sales and use tax to the Secretary of Revenue on behalf of the corporation.

Respondent contends that this statute is a unified whole and that a corporate officer cannot be held liable for unpaid sales and use taxes thereunder unless he had possession of corporate funds at the time when the corporation owed state taxes and allowed the funds to be “paid out or distributed to the stockholders,” as stated in the first paragraph. This contention is without merit. Quite plainly, the first two paragraphs of G.S. 105-253 are independent of each other; each provides a means for holding officers personally liable for unpaid corporate taxes. The two paragraphs were enacted at different times; the first in 1939, the second in 1973. They differ in scope; the first applies to all state tax schedules, while the second is limited to sales and use taxes. Neither paragraph requires reference to the other for definition of terms or for any other reason. Thus, that the first paragraph of G.S. 105-253 did not authorize the Secretary to assess the respondent under the circumstances recorded does not prevent him from being assessed under the provisions of the second paragraph. Which, on the facts recorded, was clearly authorized, we think. The respondent was a “responsible corporate officer” of Blue Ridge and the sales and use taxes collected by that corporation were not satisfied by remittance to the Secretary. Under the second paragraph of the statute, that was enough to support the assessment.

We now consider Judge Britt’s conclusion that the decision of the Tax Review Board was “affected with error of law and not supported by substantial evidence in view of the whole record.” We differ with the Judge as to the Board’s decision not being supported by substantial evidence. The evidence indisputably shows, we think, that the Department’s failure to either assess or notify Blue Ridge of the uncollected checks during the several months that passed was unreasonable and the record contains substantial evidence that this delay was a factor in the taxes not being collected from the corporation. Nevertheless, under the statute, the Department’s power to collect corporate sales and use taxes from responsible officers does not depend upon its own due diligence, and Judge Britt’s ruling that the Board’s decision was “affected with error of law” was correct.

Affirmed.

Chief Judge VAUGHN and Judge WHICHARD concur.