N.Y. Comp. Codes R. & Regs. tit. 20 § 537.5

Current through Register Vol. 46, No. 50, December 11, 2024

Section 537.5 - Seller's, transferrer's or assignor's rights, obligations and liabilities

(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)

(1) The seller, transferrer or assignor, in anticipation of the sale of business assets, may, prior to the sale, transfer or assignment in bulk of business assets, request an audit of his books and records to determine his tax liability up to the prospective date of sale of the business assets. Each seller is limited to one such request during any three-year period. The request for such an audit must be made to the Bulk Sales Unit, Central Sales Tax Section, Audit Division, State Campus, Albany, NY 12227. The request should include a showing that a sale is intended by attaching thereto a notice or an advertisement of sale, list of prospective buyers, or other evidence of intended sale. The department may request additional information and may require that such additional information be provided on a form obtained at the Bulk Sales Unit. The Division of Taxation will, in its discretion, determine whether such an audit will be performed. When it is decided that such an audit will be performed, the district tax office serving the county in which the business is located will fix the place and date for the seller, transferrer or assignor to appear with his books and records for the purpose of the audit.

(2) Upon completion of the audit, the Division of Taxation will issue to the seller a bulk sales tax certificate stating the amount of any liability due up to a date set forth in the certificate. Such certificate may also state that no taxes are due or may state the amount of taxes due up to the date of sale. The certificate may be presented to the purchaser, transferee or assignee at the time of transfer of the business assets and is to be accepted by the purchaser, transferee or assignee as proof of the amount of the seller's liability, if any, for the taxes listed thereon up to the date indicated upon the certificate. Such certificate does not relieve a purchaser of his obligation to give notice of the bulk sale to the Department of Taxation and Finance as required by subdivision (c) of section 1141 of the Tax Law, and section 537.2 of this Part.

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.

(3) The purchaser may rely on the certificate as a statement of the seller's liability for the period stated thereon. However, the certificate is not an assessment or the 90-day notice required to be given by the Division of Taxation.

(4) The seller is not excused from any obligations or liabilities on his part, either because of the purchaser's failure to comply with the provisions set forth in section 537.3 of this Part or because of the failure of the Department of Taxation and Finance to comply with its obligations set forth in section 537.6 of this Part; provided, however, nothing contained in this Part limits the right of the seller to have his tax due finally and irrevocably fixed pursuant to the provisions of subdivision (c) of section 1138 of the Tax Law.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 537.5