An Executive Who Agrees to Act as the "Responsible Person"
AN EXECUTIVE WHO AGREES TO ACT AS THE “RESPONSIBLE PERSON” for payment of local taxes for his employer in a foreign country may be in for trouble. Carl Shen managed the branch office of Leo A. Daly Co. in Taiwan. He registered as the “responsible person” for payment of Taiwan taxes. Leo A. Daly Co. closed its Taiwan office in 1992 and terminated Shen. Shen remained in the country in an effort to start his own business. In 1995, Taiwan assessed Leo A. Daly Co. for back taxes for 1991 and 1992 and refused to let Shen leave the country until the taxes were paid. Shen eventually got an injunction in the US courts ordering Leo A. Daly Co. to pay the taxes, but it took over two years.
A federal district court ruled in Nebraska ruled last month on a series of cross motions in Shen’s lawsuit against the company for breach of contract and “false imprisonment.” The case is still pending.