Amount of liability and special situations • Sales transfers . If you are buying the business or its assets, your liability as a successor cannot exceed the purchase price . • Gift transfers . If the transfer is a gift or not at arm’s length, your liability is presumed to be equal to the value of the assets you receive. You can avoid this liability by returning the gifted property . These rules also apply when a business changes its entity type (for example, from a partnership to a corporation) or name , as long as one business is effectively being discontinued and another started. Federal tax liens If there is an IRS Notice of Federal Tax Lien on the business or its assets, you must deal with the IRS separately. In that case, contact the IRS about a Certificate of Discharge and see IRS Publication 783 for more information on releasing property from a federal tax lien.
REVOCATION OR PREVENTION OF LICENSE ISSUANCE OR RENEWAL
Licenses can be blocked or pulled if a business owes enough state tax and does not resolve it.
When licenses can be denied or revoked Under Minnesota law, the Commissioner of Revenue can direct state, county, or city licensing authorities to deny, not renew, not transfer, or revoke a business, trade, occupational, or professional license if the license holder (or applicant) owes more than $500 in state taxes, penalties, or interest and is not in compliance with a payment or appeal arrangement (Minn. Stat. § 270C.72). The Commissioner does this by sending the licensing agency a Notice of Requirement for Tax Clearance. Once that notice is received, the licensing agency must not issue, renew, or transfer the license until it receives a tax clearance certificate . What a tax clearance certificate means A tax clearance certificate is issued only after the tax debt is resolved. That can mean: • The liability is fully paid, or • The taxpayer has entered into, and is complying with, an approved payment agreement or appeal arrangement. Until the licensing authority receives this certificate, the affected license cannot be issued, renewed, transferred, or (if already issued) may be subject to revocation.
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