Am I personally liable for the tax liabilities of my corporation?

Generally no as to corporate income taxes, with the exception of S corporations.  But as to payroll taxes, maybe.  The Internal Revenue Code requires employers to withhold from employees’ wages both federal income tax and the employees’ share of FICA (Social Security) contributions.  The employer is required to hold these funds withheld from its employees in a “special fund in trust” for the government until such time as the employer actually pays them over to the government.  The failure of the employer to pay such “trust fund taxes” over to the government can subject a responsible person of the employer to personal liability for a civil “trust fund recovery penalty” equal to 100% of the tax not accounted for and paid over (colloquially known as the “100-percent penalty”).

Posted in: Taxation Information