Retail and Convenience

Responsible Person Liability for Retail & Convenience Store Owners

When your store falls behind on taxes, the CDTFA can come after you personally.

Retail and convenience store owners in California face constant financial pressure—thin margins, high rent, and the daily challenge of managing cash flow. When a business falls behind on sales or use taxes, the California Department of Tax and Fee Administration (CDTFA) often holds the people behind the business personally liable for the unpaid amount. If you’ve received a CDTFA Dual Determination Notice or Responsible Person Letter, it means the state believes you are personally responsible for your store’s unpaid sales tax—even if the business has already closed.

How Responsible Person Liability Works

When a retail business fails to pay collected sales tax, the CDTFA looks past the business entity to identify the individuals who had control over financial decisions. This can include owners, managers, bookkeepers, family members with check-signing authority, or anyone who signed tax returns. The agency doesn’t need to prove bad intent—it only needs to show that you had the power to pay but didn’t. Once labeled a “responsible person,” you can be personally assessed for the entire tax debt, including penalties and interest.

Why Retail and Convenience Stores Are Targeted

The CDTFA prioritizes enforcement against retail and convenience stores because of the industry’s characteristics:

• Heavy reliance on cash transactions that can be difficult to verify.
• Informal management structures, especially in family-run stores.
• Frequent changes in ownership or business names that complicate tax tracking.
• A perception that some stores “borrow” sales tax funds to pay operating expenses.

Even if the store has shut down or transferred ownership, the CDTFA can still pursue you personally for taxes owed while you were in control.

Common Scenarios That Lead to Personal Liability

Many owners don’t realize they’re at risk until it’s too late. Common triggers include:

• Using collected sales tax to pay rent, utilities, or vendors.
• Failing to file or underreporting sales tax returns.
• Closing or selling the store before paying outstanding taxes.
• Having your name listed on tax filings or corporate accounts despite not managing finances.

How to Protect Yourself

If you’ve been contacted by the CDTFA, take immediate action.

1. Respond promptly. Notices have strict deadlines; missing them can make the assessment final.
2. Document your role. Gather records showing who handled finances and signed returns.
3. Keep accounts separate. Never mix personal and business funds.
4. Seek legal help early. A knowledgeable tax defense attorney can challenge the CDTFA’s findings and negotiate relief before it’s too late.

Protecting California Retailers from Personal Liability

Attorney Steve Baghoomian has spent more than a decade defending California business owners—particularly small retailers and convenience store operators—from CDTFA tax assessments and personal liability claims. His experience in handling Dual Determinations, responsible person cases, and tax collection actions allows him to identify weaknesses in the state’s evidence and protect individuals from unfair personal exposure.

If you’ve received a CDTFA notice or suspect your store’s tax problems could become your own, contact Baghoomian Law for a confidential consultation. When your business can’t pay, the state looks for someone who can—make sure that person isn’t you.