N.Y. Comp. Codes R. & Regs. tit. 20 § 537.0

Current through Register Vol. 46, No. 45, November 2, 2024

Section 537.0 - General information

(a) Purpose of this section. The general information contained in this section highlights and summarizes the rights, obligations and liabilities of both purchasers and sellers in a bulk sale transaction. This general information does not supplant the provisions of the subsequent sections of this Part, which contain fully detailed information and examples with respect to bulk sales.

(b) Filing requirements.

(1) A person who purchases in bulk the whole or any part of the business assets of a person required to collect tax must, at least 10 days before taking possession of such assets or paying for the same, whichever comes first, file with the Department of Taxation and Finance a notice of bulk sale. A form for this purpose 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.

(2) In addition, every such purchaser who intends commencing business or opening up a new place of business, and who will be required to collect any sales and compensating use tax or who will sell tangible personal property for resale must, at least 20 days prior to commencing business or opening a new place of business or purchasing business assets or making payment for the same, whichever comes first, file a certificate of registration with the department. Such certificate of registration form can 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. (See section 533.1 of this Title for more information on vendor registration.)

(c) Purchaser's rights and liabilities.

(1) If the purchaser files a proper and timely notice of bulk sale with the Department of Taxation and Finance and the Division of Taxation gives notice to the purchaser of a possible claim for taxes due, the purchaser is forbidden to transfer any funds or property due the seller except the portion of such funds in excess of the State's claim.

(2) Failure to file a proper and timely notice of bulk sale by a purchaser will result in personal liability of the purchaser for taxes due from the seller, limited to the purchase price or the fair market value of the business assets sold, whichever is higher.

(3) Within 90 days of the notice of bulk sale, the Division of Taxation will give notice of the actual amount of taxes due from the seller to both the seller and the purchaser. Upon receipt of such notice, the purchaser may pay the amount of such claim to the State and be relieved of all further liability with respect to such amounts to the seller. If the Division of Taxation does not give notice within 90 days of the total amount of taxes due, the purchaser, after such 90-day period, may release the funds to the seller, and the purchaser is relieved from both his obligation to further withhold such funds and his liability for the taxes due from the seller (except for any sales and use taxes due on the transfer of tangible personal property from the seller to the purchaser).

(4) If the seller makes payment of taxes due and such payment reduces the liability of the seller to an amount which is less than the amount for which the purchaser was derivatively liable, this derivative liability of the purchaser is reduced to the extent of the difference in such amounts and the purchaser will be notified accordingly. (See section 537.4[i] of this Part for examples of this general statement.)

(d) Seller's rights and liabilities.

(1) A seller who ceases the conduct of a business must file a final return within 20 days after ceasing such conduct of the business, and is required to pay all taxes due to the Department of Taxation and Finance with such return. In addition, the seller must surrender his certificate of authority to do business by attaching the certificate to and submitting the same with the final return. (See section 533.3[e] of this Title for more information on filing final returns.)

(2) A seller is entitled to have the tax due finally and irrevocably fixed in accordance with the provisions of subdivision (c) of section 1138 of the Tax Law.

(3) A seller shall give each prospective bulk purchaser of the business assets a copy of the notice to prospective purchasers relating to the purchaser's bulk sale notice requirements. Copies 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.

(4) Prior to the bulk sale, a seller may request and the Division of Taxation may, in its discretion, perform an audit of the books and records of the seller to determine his tax liability up to the date of sale of his business assets. The request for such an audit must be made to the Bulk Sales Unit and must include a showing that a sale is actually intended. Each seller is limited to one such request during any three-year period. Despite the request, the seller will remain liable for taxes due from him to the Department of Taxation and Finance.

(5) The seller also remains liable for taxes due and owing from him, whether or not the purchaser has been relieved of his obligation to pay the taxes due from the seller.

(e) Uniform Commercial Code requirements. Where applicable, the purchaser and the seller are also subject to their rights and liabilities under article 6 of the Uniform Commercial Code, relating to transfers in bulk.

(f) Purchaser's rights to a hearing.

(1) A purchaser is entitled to a hearing with the Division of Tax Appeals or a conference with the Bureau of Conciliation and Mediation Services of the Division of Taxation to review his liability for the payment of taxes determined to be due from the seller, whether or not the seller's liability has been finally and irrevocably fixed, provided the purchaser applies for said hearing or conference within 90 days of the mailing by the Division of Taxation of the notice to the purchaser of the total amount of taxes claimed to be due from the seller.

(2) A purchaser is entitled to a hearing with the Division of Tax Appeals or a conference with the Bureau of Conciliation and Mediation Services of the Division of Taxation to review a denial of his application for refund of tax determined to be due from the seller, whether or not the seller's liability has been finally and irrevocably fixed, where the following conditions are satisfied:

(i) the purchaser has paid the tax to the Department of Taxation and Finance;

(ii) the purchaser has filed his application for a refund within two years after the giving of notice by the Division of Taxation to such purchaser of the total amount of the tax which the State claims to be due from the seller; and

(iii) the purchaser has applied for said hearing or conciliation conference within 90 days from the date of denial of his application for a refund.

(3) The purchaser may obtain a copy of the pertinent portion of returns or other pertinent information taken from the returns of the seller filed with the department for the periods for which the purchaser is being held personally liable.

(g) Additional liability of the purchaser and the seller arising from a bulk sale transaction. The sales tax is imposed upon the receipts from the transfer of all tangible personal property from the seller to the purchaser which is included in the property sold in bulk, except property sold for resale as such and except the tangible personal property which is exempt from the tax. The tax is not imposed on real property or on intangible personal property such as good will or accounts receivable. The tax due is required to be paid by the seller as part of his final return or, in the alternative, may be paid by the purchaser with a casual sale return.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 537.0