N.Y. Comp. Codes R. & Regs. tit. 20 § 537.6

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

Section 537.6 - Obligations of the Department of Taxation and Finance

(a) The Department of Taxation and Finance, upon receipt of a notice of sale, transfer or assignment in bulk of business assets from the purchaser, transferee or assignee, will respond, by mailing within five business days (excluding Saturday, Sunday or a day which is a legal holiday in this State) any or all of the following:

(1) an acknowledgment of the receipt of such notice;

(2) advice to the purchaser, transferee or assignee that such notice is or is not proper (see section 537.2 of this Part); or

(3) a notice of possible claim to the purchaser, seller and escrow agent, if any, for taxes due the State or a statement that no taxes are due.

For the purposes of this subdivision, the date of receipt of the notice of sale from the purchaser, transferee or assignee is the date the notice is actually delivered to the Bulk Sales Unit or, if applicable, the date it is deemed received by the Bulk Sales Unit pursuant to section 537.2(c)(6) of this Part, whichever date is later, rather than the date of registry or certificate of mail or the date of mailing.

(b) If the Division of Taxation fails within five business days to mail a notice of possible claim for taxes due the State, and such purchaser, transferee or assignee has given proper (both as to service and contents) and timely notice, the purchaser, transferee or assignee is relieved from his obligation to withhold any funds from the seller, transferrer or assignor, and is relieved from liability for taxes due by the seller (except the sales taxes due on the sale of the tangible personal property) except in the situation and to the extent that there are outstanding warrants or judgments for unpaid sales tax liability due and owing by the seller. The seller, transferrer or assignor, however, is not relieved of any of his obligation or liability. If the department has issued a notice of possible claim to a purchaser in response to a notice of sale, an additional notice of possible claim will not have to be issued where a revised notice of sale is filed.

(c) The Division of Taxation will, within 90 days after receipt of a notice of sale, transfer or assignment in bulk of business assets, mail to the purchaser, transferee or assignee and the seller, transferrer or assignor a notice of the total taxes due the State or a notice that no taxes are due and the funds withheld may be released.

(d) If the Division of Taxation fails, within 90 days after receipt of a proper (both as to service and contents) notice of sale, transfer or assignment in bulk of business assets (whether or not such notice was timely in accordance with the provisions of subdivision [c] of section 537.2 of this Part), to mail a notice of claim for total taxes due from the seller, transferrer or assignor, or fails to mail an authorization for the release of funds withheld by the purchaser, transferee or assignee, the purchaser, transferee or assignee is relieved from both his obligation to further withhold such funds from the seller, transferrer or assignor and his liability for the taxes due from such seller, transferrer or assignor. However, the seller, transferrer or assignor remains liable.

(e) The Department of Taxation and Finance will, upon payment of the taxes due, if any, from the seller, transferrer or assignor, issue to the purchaser, transferee or assignee or the escrow agent, if any, an authorization to release funds to which the seller, transferrer or assignor may be entitled. Such authorization may limit the amount of such funds to be released.

(f) When an audit has been performed prior to a sale of business assets as provided for in section 537.5 of this Part, the Division of Taxation shall issue a bulk sales tax certificate to the seller, transferrer or assignor, indeicating his tax liability up to the date stated on the certificate. Such bulk sales tax certificate, if presented by the seller, transferrer or assignor to the purchaser, transferee or assignee, serves as proof of the amount of the seller's liability stated thereon up to the date indicated upon the certificate.

(g) Where the liability of a purchaser, transferee or assignee, for the payment to the State of any such taxes determined to be due from the seller, transferrer or assignor, has been wholly paid or satisfied or no longer exists, the Division of Taxation shall mail to such purchaser, transferee or assignee a notice, addressed to his last known address, setting forth that such liability has been wholly paid or satisfied or no longer exists. The Division of Taxation shall include in such notice the following additional information:

(1) the name and last known address of the purchaser, transferee or assignee;

(2) the amount of the lien paid, satisfied or vacated; and

(3) a statement to the effect that consumer reporting agencies must delete from a credit file any reference to the particular tax lien within 30 days of receipt from the purchaser, transferee or assignee of such notice.

However, an order or decree in a bankruptcy proceeding does not give rise to the notice requirements of this subdivision.

(h) The following examples illustrate the provisions of this section:

Example 1:A person purchasing business assets in bulk will take possession of the assets and pay for the same on August 22, 1981. He effects personal service of a properly executed notice of sale by having such notice hand-delivered to an officer of the Department of Taxation and Finance who is authorized by the department to accept such service. The notice of sale is hand-delivered on August 9, 1981. Since the notice was served at least 10 days prior to the date of sale, the notice is timely. However, personal service of the notice and the receipt of the notice is deemed to have taken place on August 12, 1981, 10 days prior to the date of sale. The Division of Taxation will mail to the purchaser a notice of possible claim for taxes due the State on or before August 19, 1981, which date is five business days subsequent to August 12, 1981. Furthermore, the Division of Taxation will mail to the purchaser a notice of the total taxes due the State, or a notice that no taxes are due and the funds withheld may be released. Such notice will be mailed by the Division of Taxation on or before November 10, 1981, which date is 90 days after August 12, 1981. The failure of the Division of Taxation to send either notice within the appropriate times provided herein will discharge the purchaser from liability. However, the seller is not discharged from his liability.

Example 2:Assume the same facts as in Example 1, except that personal service was effected on August 12, 1981. Since the notice was served at least 10 days prior to the date of sale, the notice is timely. The obligations of the Division of Taxation with respect to mailing the notice of possible claim for taxes due and the mailing of the notice of the total taxes due are the same as in the above example.

Example 3:Assume the same facts as in Example 1, except that the notice of sale is hand-delivered on August 14, 1981. The notice of sale is untimely. The Division of Taxation will mail to the purchaser a notice of possible claim for taxes due the State, and will attempt to mail the same as expeditiously as possible. Furthermore, the Division of Taxation will mail to the purchaser a notice of the total taxes due the State or a notice that no taxes are due and the funds withheld may be released. Such notice will be mailed by the Division of Taxation on or before November 12, 1981, which date is 90 days after August 14, 1981. The failure of the Division of Taxation to mail such notice on or before November 12, 1981 will discharge the purchaser from liability. However, the seller is not discharged from his liability.

Example 4:Assume the same facts as in Example 3, except that the notice of sale is mailed by registered mail on August 14, 1981. The notice of sale is untimely. The obligations of the Division of Taxation with respect to mailing the notice of claim for possible taxes due and the mailing of the total taxes due are the same as in the above example.

Example 5:A person purchasing business assets in bulk will take possession of the assets and pay for the same on August 22, 1981. He mails a properly executed notice of the sale by certified mail--return receipt requested--to the Bulk Sales Unit as provided in subdivision (b) of section 537.2 of this Part. The postmark date stamped on the sendor's receipt for such mail is August 9, 1981. The mail is actually received by the Bulk Sales Unit on August 11, 1981. Since the notice was served at least 10 days prior to the date of sale, the notice is timely. However, service of the notice and receipt of the notice is deemed to have taken place on August 12, 1981, 10 days prior to the date of sale. The Division of Taxation will mail to the purchaser a notice of possible claim for taxes due the State on or before August 19, 1981, which date is five business days subsequent to August 12, 1981. Furthermore, the Division of Taxation will mail to the purchaser a notice of the total taxes due the State or a notice that no taxes are due and the funds withheld may be released. Such notice will be mailed by the Division of Taxation on or before November 10, 1981, which date is 90 days after August 12, 1981. The failure of the Division of Taxation to send either notice within the appropriate times provided herein discharges the purchaser from liability. However, the seller is not discharged from his liability.

Example 6:Assume the same facts as in Example 5, except that, although the postmark on the sender's receipt for the certified mail--return receipt requested--is stamped August 9, 1981, the envelope or wrapper containing the notice is actually received by the Bulk Sales Unit on August 14, 1981. Since the notice was served at least 10 days prior to the date of sale, the notice is timely. For purposes of the 90-day notice by the Division of Taxation, notice of the total taxes due the State or notice that no taxes are due and the funds withheld may be released, the date of receipt of the notice is deemed to be August 12, 1981, 10 days prior to the date of sale. However, for purposes of the notice by the Division of Taxation of possible claim for taxes due the State, the date of the receipt of the notice is August 14, 1981, the date when such notice was actually received by the Bulk Sales Unit. The Division of Taxation will mail to the purchaser a notice of possible claim for taxes due the State on or before August 21, 1981, which date is five business days subsequent to August 14, 1981. Furthermore, the Division of Taxation will mail to the purchaser a notice of the total taxes due the State or a notice that no taxes are due and the funds withheld may be released. Such notice will be mailed by the Division of Taxation on or before November 10, 1981, which date is 90 days after August 12, 1981. The failure of the Division of Taxation to send either notice within the appropriate times provided herein will discharge the purchaser from liability. However, the seller is not discharged from his liability.

Example 7:Assume the same facts as in Example 6, except that the postmark is dated August 12, 1981. Since the notice is served at least 10 days prior to the date of sale, the notice is timely. The obligations of the Division of Taxation with respect to the mailing of the notice for possible taxes due and the mailing of the notice of total taxes due are the same as in the above example.

Example 8:Assume the same facts as in Example 7, except that a warrant for unpaid sales taxes had been docketed as a judgment against the seller on July 22, 1980, that is, more than 10 days prior to the date of sale. The Division of Taxation will mail to the purchaser a notice of possible claim for taxes due, despite the fact that the purchaser has notice of record of a possible claim for taxes due by virtue of the docketed warrant against the seller. The Division of Taxation will attempt to mail the notice of possible claim as expeditiously as possible. The Division of Taxation will also mail to the purchaser a notice of the total taxes due the State or a notice that no taxes are due and the funds withheld may be released. Such notice will be mailed on or before November 10, 1981, which date is 90 days after August 12, 1981.

Example 9:Assume the same facts as in Example 7, except that no return receipt was requested. Since no return receipt was requested, the date of service is the date when the notice was received by the Bulk Sales Unit, that is, on August 14, 1981 rather than the date stamped on the envelope or wrapper. The notice is therefore untimely since service was not made at least 10 days prior to August 22, 1981, the date of sale. The Division of Taxation will mail to the purchaser a notice of possible claim for taxes due the State and will attempt to mail such notice as expeditiously as possible. Furthermore, the Division of Taxation will mail to the purchaser a notice of the total taxes due the State or a notice that no taxes are due and the funds withheld may be released. Such notice will be mailed by the Division of Taxation on or before November 12, 1981, 90 days after August 14, 1981. The failure of the Division of Taxation to send such notice by November 12, 1981 discharges the purchaser from liability. However, the seller is not discharged from his liability.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 537.6