# Banking/finance: Liability of "authorized check signer" **URL:** \ **Category:** Factual Questions\ **Created:** [February 14, 2007, 9:52pm UTC](https://boards.straightdope.com/t/banking-finance-liability-of-authorized-check-signer/392268 "2007-02-14T21:52:18Z")\ **Posts on this page:** 5\ **Page:** 1
**Author:** ![fluiddruid](https://avatars.discourse-cdn.com/v4/letter/f/c2a13f/32.png) [@fluiddruid](https://boards.straightdope.com/u/fluiddruid)\ **Post date:** [February 14, 2007, 9:52pm UTC](https://boards.straightdope.com/t/banking-finance-liability-of-authorized-check-signer/392268/1 "2007-02-14T21:52:18Z")
A friend of mine’s brother is in the military and is being sent out of state. He has asked my friend to be an “authorized check signer” and take care of paying some debts for him out of that account while he is gone. Does an authorized check signer incur any liability? Specifically, will my friend be responsible for any of his brother’s current or future debts, or any fees incurred upon the account (overdraft, for example)? Will he risk his credit rating at all? Is there any more to this role than simply being able to sign for checks on the account? His brother claims that the bank stated that, as long as the account is still solely in his brother’s name, that he would have no responsibility. ---
**Author:** ![GreedySmurf](https://avatars.discourse-cdn.com/v4/letter/g/a698b9/32.png) [@GreedySmurf](https://boards.straightdope.com/u/GreedySmurf)\ **Post date:** [February 15, 2007, 3:32am UTC](https://boards.straightdope.com/t/banking-finance-liability-of-authorized-check-signer/392268/2 "2007-02-15T03:32:20Z")
[QUOTE=fluiddruid] A friend of mine’s brother is in the military and is being sent out of state. He has asked my friend to be an “authorized check signer” and take care of paying some debts for him out of that account while he is gone. Does an authorized check signer incur any liability? Specifically, will my friend be responsible for any of his brother’s current or future debts, or any fees incurred upon the account (overdraft, for example)? Will he risk his credit rating at all? Is there any more to this role than simply being able to sign for checks on the account? His brother claims that the bank stated that, as long as the account is still solely in his brother’s name, that he would have no responsibility. [/QUOTE] I will preface my answer by saying my experience is in Australian banking and finance, but from what I know this type of issue translates to other countries. Your friend will not and cannot incur any liability from being an authorized cheque signatory (I hope you’ll forgive my Australian spelling for cheque 😉 ) All he is agreeing to, is that his brother is telling the Bank, you may accept as legitimate any cheques with my brothers signature on them. That’s where it starts and ends, providing there is nothing else there apart from becoming an authorised cheque signatory. ---
**Author:** ![StuffLikeThatThere](https://avatars.discourse-cdn.com/v4/letter/s/bc8723/32.png) [@StuffLikeThatThere](https://boards.straightdope.com/u/StuffLikeThatThere)\ **Post date:** [February 15, 2007, 3:57am UTC](https://boards.straightdope.com/t/banking-finance-liability-of-authorized-check-signer/392268/3 "2007-02-15T03:57:04Z")
That’s my (non-banker) understanding as well. I do bookkeeping for a small construction firm. Because the boss doesn’t want me pestering him all the time to sign everything (we often aren’t in the office at the same time), I can sign checks. I’m unaffected by his credit rating and his money in general, except that I am not supposed to embezzle it. So I don’t. Besides, he’s my cousin, and family reunions would really stink if I’d done that. ---
**Author:** ![A.R.Cane](https://avatars.discourse-cdn.com/v4/letter/a/ee7513/32.png) [@A.R.Cane](https://boards.straightdope.com/u/A.R.Cane)\ **Post date:** [February 15, 2007, 7:03am UTC](https://boards.straightdope.com/t/banking-finance-liability-of-authorized-check-signer/392268/4 "2007-02-15T07:03:57Z")
I recall a case I heard about, not too long ago, where a woman was hired as a bookkeeper, or somesuch. She was given authorization to issue checks to pay company obligations. When the co. got into trouble w/ the IRS, she was on the hook. The IRS took the position that she was a company official, since she had signed co. checks. Therefore she was equally responsible for the unpaid taxes. I can’t provide a cite as I don’t remember any of the names involved. Maybe one of our legal experts could check in. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [February 15, 2007, 3:29pm UTC](https://boards.straightdope.com/t/banking-finance-liability-of-authorized-check-signer/392268/5 "2007-02-15T15:29:31Z")
[QUOTE=A.R. Cane] I recall a case I heard about, not too long ago, where a woman was hired as a bookkeeper, or somesuch. She was given authorization to issue checks to pay company obligations. When the co. got into trouble w/ the IRS, she was on the hook. The IRS took the position that she was a company official, since she had signed co. checks. Therefore she was equally responsible for the unpaid taxes. I can’t provide a cite as I don’t remember any of the names involved. Maybe one of our legal experts could check in. [/QUOTE] This is a different animal from what the OP describes. The cases, which come up pretty frequently, involve what is called “trust fund liability” for employment taxes. All “responsible persons” are liable for these if the company doesn’t pay them. Bookkeepers have sometimes been held to meet the definition. Obligatory links: [http://www.goodwinprocter.com/getfile.aspx?filepath=/Files/publications/INS\_responsible\_liability\_12\_00.PDF](http://www.goodwinprocter.com/getfile.aspx?filepath=/Files/publications/INS_responsible_liability_12_00.PDF) [http://www.nysba.org/Content/ContentGroups/Section\_Information1/Tax\_Section\_Reports/ReportNo1035.pdf](http://www.nysba.org/Content/ContentGroups/Section_Information1/Tax_Section_Reports/ReportNo1035.pdf) [http://www.moranlaw.net/trustfundtax.htm](http://www.moranlaw.net/trustfundtax.htm) [http://www.nysscpa.org/cpajournal/1997/0297/features/f30.htm](http://www.nysscpa.org/cpajournal/1997/0297/features/f30.htm) This last link includes the following summary: > [@](#): > > The following is a summary of the identifying characteristics of responsible persons that have been referred to by the courts: > > - Ultimate authority for the decision not to pay trust fund taxes. > > - Effective power to pay the taxes > > - Ultimate authority over the expenditures of funds or the authority to direct payment to creditors. > > - Discretion regarding which bills other than trust fund taxes are to be paid. > > - Significant control or authority over the business entity’s general finances or general decision making. > > - Check signing authority. > > - Preparation and signing of payroll tax returns. > > - An officer or director of the corporation. > > - Ability to hire and fire employees. > > - Stockholder of a corporation or partner of a partnership. [http://www.nysscpa.org/cpajournal/1997/0297/features/f30.htm](http://www.nysscpa.org/cpajournal/1997/0297/features/f30.htm)