SUCCESSOR LIABILITY FOR CERTAIN TAXES WHEN A BUSINESS OR ITS ASSETS ARE TRANSFERRED
When you buy or acquire a business or its assets , you may become responsible for certain unpaid Minnesota sales and withholding taxes of the prior owner if a state tax lien has been filed and you do not follow the required notice steps. This can apply whether the transfer is a sale, a gift, or a change in business entity or name where one business is ending and another is starting. When successor liability can apply Successor liability can apply when all or substantially all of a business’s assets are transferred and the Minnesota Department of Revenue has filed an enforceable lien for unpaid taxes. If you do not properly notify the department before taking over, you can become liable for: • The amount of the lien , including interest and penalties, and • Other unpaid sales or withholding tax , interest, and penalties of the transferring business, up to the value or purchase price of what you acquired. How to avoid unexpected tax liability To protect yourself, you must notify the Commissioner of Revenue at least 20 days before you either: • Take possession of the business assets, or • Pay the purchase price. Your notice must include: • Information about the transfer of the business or its assets • The terms and conditions of the transfer • The Minnesota Tax ID number of the business being transferred After receiving your notice, the Commissioner has 20 days to respond and may: • Tell you whether there are unpaid sales or withholding taxes, interest, and penalties in addition to the amounts shown on any lien • Tell you how much is needed to satisfy the lien • Tell you whether additional tax returns are due • Confirm that there are no additional taxes due beyond what is shown on the lien If the Commissioner does not respond within 20 days , you are not liable for any additional taxes beyond the amounts shown on the filed lien.
233
Made with FlippingBook - Online Brochure Maker