New York Codes, Rules and Regulations
Title 20 - DEPARTMENT OF TAXATION AND FINANCE
Chapter IV - Sales And Use And Other Miscellaneous Taxes
Subchapter A - Sales And Use Taxes
Part 537 - Bulk Sales
Section 537.5 - Seller's, transferrer's or assignor's rights, obligations and liabilities
Current through Register Vol. 46, No. 12, March 20, 2024
(a) The seller, transferrer or assignor of business assets in bulk is, at all times, responsible for the payment of any tax for which he is liable under article 28 and pursuant to the authority of article 29 of the Tax Law.
(b) The seller, transferrer or assignor must keep and make available to the Division of Taxation all books and records required to determine his or her tax liability (see Records, section 533.2 of this Title).
(c) Upon receipt from the Division of Taxation of a notice requesting that he produce his books and records for the purpose of an audit, the seller, transferrer or assignor is required to make his books and records available.
(d) Where the seller, transferrer or assignor ceases the conduct of a business, he is required to file a final sales and use tax return within 20 days after ceasing the conduct of the business, make payment of all taxes due with such return and surrender his certificate of authority to collect taxes.
(e) The seller, transferrer or assignor must give each prospective purchaser of his business a copy of the notice to prospective purchasers relating to the purchaser's bulk sale notice requirements. Such notice accompanies the certificate of authority. A copy of such notice may be obtained from the Taxpayer Assistance Bureau, Department of Taxation and Finance, State Campus, Albany, NY 12227, or from the Taxpayer Assistance Bureau at any district office of the Department of Taxation and Finance.
(f)
Example 1:Upon audit, the seller's tax liability up to the date of sale is determined to be $8,000. The seller pays the $8,000 to the Department of Taxation and Finance and is given a bulk sales tax certificate stating he has no tax liability up to the date of sale. The purchaser, upon receipt from the seller of the bulk sales tax certificate, may pay over all the funds to the seller.
Example 2:Upon audit, the seller's tax liability is determined to be $12,000. The seller pays $2,000 to the department in part satisfaction of his liability. The fair market value and the purchase price of the business assets are both $8,000. The seller is given a bulk sales tax certificate indicating that a tax liability of $10,000 up to the date of sale still exists against the seller. The purchaser's liability is limited to $8,000. In addition, the purchaser will be liable for any tax, plus any penalty and interest, due on the sale of tangible personal property between the seller and the purchaser.
Example 3:Assume the same facts as in Example 2, except that the seller pays $8,000 instead of $2,000, and the certificate indicates that the seller's liability has been ascertained to be $4,000 up to February 28, 1979, a date one month prior to the date of closing. The purchaser may rely on such fact. However, since there may be additional liability subsequent to that date, the purchaser is required to withhold the total purchase price pending the receipt of a notice of total tax due or authority to release the funds.
Example 4:Upon audit, the seller's tax liability up to the date of sale is determined to be $6,000. The seller pays $4,000 to the Department of Taxation and Finance in part satisfaction of his liability. The fair market value and purchase price of the business is $8,000. The seller is given a bulk sales tax certificate indicating that a tax liability up to the date of sale of $2,000 still exists against the seller. The purchaser, upon receipt of the bulk sales tax certificate, must withhold such $2,000.