Pister v. State, Dept. of Revenue

[BUSINESS LAW]

 

In Pister v. State, Dept. of Revenue,[1] the supreme court held that res judicata does not bar the State from seeking to pierce a corporation’s corporate veil to collect upon a tax debt.[2] Dr. Pister owns a radiology business called Northwest Medical Imaging, which in 1997 the Alaska Department of Revenue assessed for unpaid taxes, penalties and interests.[3] The Office of Tax appeals entered a judgment against Northwest Medical for $123,188 and the State filed a complaint in 2008 seeking to collect that judgment from Pister personally.[4] The superior court held that the corporation’s veil could be pierced in order to do so.[5] The shareholders and corporation appealed arguing that the superior court erred by not barring the suit under the principle of res judicata.[6] The supreme court affirmed the lower court’s decision, reasoning that piercing the corporate veil is not a claim for damages, instead it is a means of imposing liability on an underlying cause.[7] It is a procedural rather than a substantive claim.[8] Moreover, the supreme court noted that other courts that have considered this question agree that veil piercing should not be barred by res judicata.[9] Affirming the lower courts decision, the supreme court held that res judicata does not bar the State from seeking to piece a corporation’s corporate veil to collect upon a tax debt.[10]

 

[1] 354 P.3d 357 (Alaska 2015).

[2] Id. at 360.

[3] Id.

[4] Id.

[5] Id. at 361.

[6] Id. at 360.

[7] Id. at 362.

[8] Id. at 363.

[9] Id.

[10] Id. at 360.

Pister v. State, Dept. of Revenue

[BUSINESS LAW]

 

In Pister v. State, Dept. of Revenue,[1] the supreme court held that res judicata does not bar the State from seeking to pierce a corporation’s corporate veil to collect upon a tax debt.[2] Dr. Pister owns a radiology business called Northwest Medical Imaging, which in 1997 the Alaska Department of Revenue assessed for unpaid taxes, penalties and interests.[3] The Office of Tax appeals entered a judgment against Northwest Medical for $123,188 and the State filed a complaint in 2008 seeking to collect that judgment from Pister personally.[4] The superior court held that the corporation’s veil could be pierced in order to do so.[5] The shareholders and corporation appealed arguing that the superior court erred by not barring the suit under the principle of res judicata.[6] The supreme court affirmed the lower court’s decision, reasoning that piercing the corporate veil is not a claim for damages, instead it is a means of imposing liability on an underlying cause.[7] It is a procedural rather than a substantive claim.[8] Moreover, the supreme court noted that other courts that have considered this question agree that veil piercing should not be barred by res judicata.[9] Affirming the lower courts decision, the supreme court held that res judicata does not bar the State from seeking to piece a corporation’s corporate veil to collect upon a tax debt.[10]

 

[1] 354 P.3d 357 (Alaska 2015).

[2] Id. at 360.

[3] Id.

[4] Id.

[5] Id. at 361.

[6] Id. at 360.

[7] Id. at 362.

[8] Id. at 363.

[9] Id.

[10] Id. at 360.