N.Y. Comp. Codes R. & Regs. tit. 20 § 537.8

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

Section 537.8 - Purchaser's, transferee's or assignee's rights to hearing

(a) The liability of the purchaser, transferee or assignee shall be finally and irrevocably fixed unless the purchaser, within 90 days after the date of the mailing of the notice (the 90-day notice) by the Division of Taxation to him of the total amount of any tax or taxes which the State claims to be due from the seller, transferrer or assignor, applies to the Division of Tax Appeals for a hearing or to the Bureau of Conciliation and Mediation Services of the Division of Taxation for a conference.

(b) The rules of practice and procedure contained in Parts 2394 and 3000 of this Title apply to the assessment of liability against the purchaser.

(c) The purchaser, transferee or assignee has the burden of proof to establish that the assessment issued against him is not correct.

(d) The purchaser, in his petition, may challenge the assessment on any grounds that establish that the assessment is incorrect, including:

(1) that the transfer is not a bulk sale as defined in section 537.1 of this Part;

(2) that the purchaser's notice was proper and timely in accordance with the provisions of section 537.2 of this Part;

(3) that the amount of funds withheld by the purchaser from the seller was sufficient and in accordance with the requirements of section 537.3 of this Part;

(4) that the Department of Taxation and Finance has failed to meet its obligations provided for in section 537.6 of this Part;

(5) that the amount of the liability exceeds the purchase price or the fair market value of the items purchased; or

(6) any combination of the foregoing paragraphs (1) through (5).

(e) The purchaser may also challenge the assessment on the grounds that the amount determined by the Division of Taxation to be due from the seller is erroneous or excessive, whether or not such amount had been finally and irrevocably fixed against the seller.

Example 1:On April 15, 1975, a determination was issued against a corporation assessing unpaid sales taxes in the amount of $5,000, plus penalty and interest. The corporation failed to apply for a hearing to review the determination and the assessment had become finally and irrevocably fixed against the corporation. Four years later, on April 15, 1979, the corporation sold its business assets in bulk to a purchaser for $100,000. The purchaser failed to give notice to the Department of Taxation and Finance or withhold the funds from the seller. Furthermore, the purchaser did not pay $500 sales tax imposed on the sale of tangible personal property which was included in the business assets sold to him. From information received from the seller, the Division of Taxation ascertained that a bulk sale had taken place and that subsequent to the date of the assessment, but prior to the date of sale of the assets, the seller-corporation had failed to collect $6,000 in sales taxes from its customers which the State claims should have been collected. One year later on April 15, 1980, an additional assessment was issued against the seller-corporation for $6,500, which amount included both the $6,000 the seller failed to collect from his customers prior to the bulk sale and the $500 sales tax on the taxable tangible personal property included in the assets sold in bulk, plus appropriate penalty and interest. On that date, the Division of Taxation mailed a notice to the purchaser of the $11,500 claimed to be due from the seller ($5,000 plus $6,500). On May 15, 1980, the purchaser filed his application for a hearing. The seller did not file. The purchaser may challenge the $11,500 liability asserted against him on the grounds that both the $5,000 and the $6,500 assessment issued against the seller were excessive.

(f) The purchaser is entitled to examine the returns of the seller and any other information in the possession of the department with respect to any sales taxes due from the seller, but only those portions of such returns or other information which are pertinent to the issue of the purchaser's liability.

(g) 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 purchaser has paid the tax to the Department of Taxation and Finance and has applied for said hearing or conference within 90 days from the date of denial of his application for a refund; provided, however, that 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.

Cross reference:For the rules and regulations concerning proceedings before the Division of Tax Appeals and review of their decisions by the Tax Appeals Tribunal see Part 3000 of this Title. For the rules and regulations concerning proceedings before the Bureau of Conciliation and Mediation Services of the Division of Taxation see Part 4000 of this Title.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 537.8