We have a client in the State of New York that runs a restaurant. Prior to hiring us for the outstanding State of New York tax issues they had a third party come in and purchase the assets, goodwill, and inventory from our client. However, they conducted this transaction without regard to the State Tax Liens in place covering over $82,000 in sales tax and withholding liability. The State of New York was attempting to assess the buyer with the entirety of the liability owed!
We had to go back and recreate the transaction by showing the State of New York the purchase agreement, sales documents, and have the client cut a check to the State in the amount of $6,000 and another $1,000 or $2,000 to cover the sales tax in relation to the transaction. Yes, the State of New York charges sales tax on the resale of assets, licensing, inventory, and goodwill in a business transaction. Unbelievable. We had to go through the Bulk Sale Unit, which by State law a buyer and seller have only 15 days to report the transaction and pay either the liability owed by the seller in full, or pay for the value of the assets along with the applicable tax. If they do not abide by this rule the buyer can be assessed the liability.
After negotiations with the bulk sale unit and the filing of an appeal with the State of New York they agreed to allow us a conciliation conference to discuss the issues with the transaction. We provided all of the sales documents and a copy of the payment that was made to the State when we went back to correct the problem.
Last week we heard back from the State of New York and they decided not to assess the new business with the $82,000 and accept the payment made, with penalty and interest totaling $3,000 to settle the issue. Therefore all in all we saved the new business from lien filings, levies, and other collection action the State might take with regard to the debt.
If you are considering selling an asset, a business, or assets within the business look no further than Highland Tax Group, Inc. at www.highlandtaxresolution.com to assist you with your issues. We can also be reached by phone at 720-398-6088.