The Tennessee Court of Appeals has upheld a ruling that holds Terri Gang, co-owner of Strikers Steakhouse, personally liable for unpaid sales taxes. The decision, issued on September 23, 2026, affects Gang and her co-owner, Stephanie Appleton, who faced a tax assessment totaling over $300,000. This ruling is significant as it clarifies the personal liability of business owners for tax obligations and the conditions under which they can be held accountable.
The case began when the Tennessee Department of Revenue audited Strikers Steakhouse, LLC, for the years 2016 to 2018. The audit revealed that the business had underreported and failed to pay sales taxes, leading to a proposed assessment of $254,167.04. Strikers did not contest this assessment, which became final in January 2019. After the business failed to pay, the Department issued personal assessment letters to both Gang and Appleton, holding them liable for the unpaid taxes under Tennessee law.
Gang and Appleton requested an informal conference to dispute the assessments, arguing that they were not personally liable and that the assessments were untimely and inaccurate. However, the Department upheld its decision. Gang filed a complaint in the Davidson County Chancery Court challenging her personal assessment, while the Department counterclaimed to hold her liable for the business's tax obligations. The court granted the Department's motion for summary judgment, leading to Gang's appeal.
The court ruled that Gang was indeed personally liable for the unpaid sales taxes. Judge Andy D. Bennett, writing for the court, stated, "The undisputed facts show that Ms. Gang was an owner of Strikers, designated herself as an authorized representative for the business, oversaw the business’s financial affairs, had the authority to sign checks, and was responsible for managing the business’s day-to-day operations." This ruling clarifies that individuals in positions of authority within a business can be held accountable for tax liabilities if they fail to remit collected taxes.
Additionally, the court found that Gang willfully failed to remit the full amount of sales tax collected. The opinion noted that Gang admitted to making deductions for waste and employee meals before remitting taxes, which led to the shortfall. Judge Bennett emphasized that personal liability could arise even without malicious intent, stating, "Such a deliberate or reckless disregard cannot shield a responsible person from personal liability for nonpayment of a tax."
The ruling has implications for business owners across Tennessee. It reinforces the idea that owners and operators of businesses must ensure that taxes collected from customers are properly remitted to the state. Failure to do so can result in personal liability, even if the business itself is not contesting the tax assessment.
The decision also addresses the timing of tax assessments, with the court affirming that the Department's actions to collect from Gang were timely. The Department's filing of a counterclaim was deemed a proper method of initiating a collection proceeding within the six-year limitation period for tax collection, as outlined in Tennessee law.
Going forward, this ruling may serve as a precedent for similar cases regarding personal liability for tax obligations. Business owners must be vigilant about their tax responsibilities and the potential consequences of failing to remit collected taxes.
As for what’s next, Gang has the option to appeal the ruling to a higher court. However, the court's decision is final unless challenged successfully. There are no related cases pending that would affect the outcome of this ruling.