Graeter Corporation acquired all of the stock of Lesser Corporation in 2012, and the entities have filed a state and Federal consolidated income tax return ever since. In 2015, an audit notice from the state unemployment tax administration makes it clear that Lesser underpaid its 2013 state and Federal payroll taxes by $2 million. Lesser's cash flow at this time is poor, and it has insufficient funds to pay the delinquent amount plus interest and penalties. Can the state revenue agency collect the outstanding payroll tax from Graeter under the Federal "joint and several liability" rule for tax obligations of consolidated return affiliates? Explain.
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