In New York, an acquisition of assets of a business may cause the buyer to become secondarily liable for the sales tax of the selling business. The “bulk sale” procedures, if followed, protect a buyer from such liability.1 The statute provides that, “Whenever a person required to collect tax shall make a sale, transfer, or assignment in bulk of any part or the whole of his business assets, otherwise than in the ordinary course of business,” the purchaser must give New York State notice of such sale at least 10 days prior.2 Within five business days of receiving notice, the state will inform purchaser whether the seller has any outstanding sales tax liability.
If a liability exists, the purchaser (referred to as the transferee) must withhold the purchase price until further notice from the state (within 90 days), at which time the transferee may have to remit some or all of the withheld purchase price to the state. If a transferee fails to comply with these rules, it will become liable for seller’s (transferor’s) outstanding sales tax liability, although the transferee’s liability will be limited to the greater of the amount of the purchase price or fair market value of the assets.
