Current through Register Vol. 46, No. 12, March 20, 2024
(a)
(1) A purchaser, transferee or assignee of
business assets in a bulk sale must give timely notice to the Department of
Taxation and Finance concerning the bulk sale as provided for in paragraph (c)
of section
1141 of the Tax Law, and section
537.2
of this Part.
(2) The purchaser,
transferee or assignee is not relieved of his obligation to give notice of the
bulk sale by reason of any representation or information from the seller or by
reason of any knowledge or belief on the part of the purchaser, transferee or
assignee that no taxes are owed by the seller, transferrer or assignor, or for
any other reason.
(3) The
purchaser, transferee or assignee shall file with the Department of Taxation
and Finance a certificate of registration if required by section
1134 of
the Tax Law and section
533.1 of
this Title.
(b) The
purchaser, transferee or assignee is required to withhold the lessor of:
(1) all sums of money, notes, property or
choses in action or other consideration (referred to in this Part as funds
which he is required to turn over to the seller, transferrer or assignor;
or
(2) the total tax due from the
seller, transferrer or assignor as contained in the notice of total tax due the
State which is sent to the purchaser by the Department of Taxation and Finance
within 90 days from the date or deemed date of receipt (whichever is
applicable) of the notice of bulk sale. The purchaser is forbidden to turn over
such funds to the seller, until relieved of such obligation as provided for in
subdivision (c) of this section. It should be noted that since it is unlikely
that the Department of Taxation and Finance will issue such a notice of total
tax due prior to the sale closing, a purchaser, transferee or assignee wishing
to avoid derivative liability for the seller's, transferrer's or assignor's
sales and use taxes should withhold the entire consideration to be paid the
seller, transferrer or assignor until such consideration is released by the
department or any such liability is satisfied. A purchaser's, transferee's or
assignee's failure to notify the department of a bulk sale of business assets
will not relieve him of his obligation to withhold and pay over the sale
proceeds or fair market value of the assets acquired. A purchaser, transferee
or assignee who fails to withhold such consideration will become personally
liable for any sales and use taxes owed by the seller, transferrer or assignor
at the time of the sale up to the greater of the selling price or fair market
value of the business assets transferred.
(c) The purchaser, transferee or assignee is
relieved of his obligation to withhold such funds and is relieved from
liability for taxes due from the seller (except the sales and use taxes due on
the sale of tangible personal property between the seller and purchaser) if
notice to the Department of Taxation and Finance has been given pursuant to
section
537.2
of this Part; and
(1) the Division of
Taxation, within five business days (excluding Saturdays, Sundays and legal
holidays) from the date of actual receipt, or if applicable the date of deemed
receipt, whichever date is later, of a proper and timely notice given by the
purchaser, transferee or assignee, fails to inform such purchaser, transferee
or assignee by mailing to him within such time a notice that a possible claim
for taxes exists against the seller, transferrer or assignor under the terms
and conditions set forth in section
537.6
of this Part;
(2) the Division of
Taxation, after receipt of a proper notice both as to service or contents
(whether or not such notice was timely in accordance with the provisions of
subdivision [c] of section
537.2
of this Part), fails to give notice of the total amount of any taxes due from
the seller under the terms and conditions set forth in section
537.6
of this Part within 90 days after receipt of the notice;
(3) the purchaser, transferee or assignee has
received from the Division of Taxation a notice that the funds being withheld
may be released; or
(4) the
purchaser, transferee or assignee has received, from the seller, transferrer or
assignor, a bulk sales tax certificate issued by the Division of Taxation to
such seller, transferrer or assignor stating that all taxes due up to the date
of sale have been paid. (See section
537.5[f]
of this Part for detailed information on the pre-sale audit program.)
(d) Such funds required to be
withheld are subject to a first priority right and lien for any taxes
theretofore or thereafter determined to be due from the seller, transferrer or
assignor.
(e) The purchaser may pay
any taxes due on the purchase of any tangible personal property directly to the
Department of Taxation and Finance as provided in section
531.6
or
533.3 of this
Title.