New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter IV - Sales And Use And Other Miscellaneous Taxes › Subchapter A - Sales And Use Taxes › Part 537 - Bulk Sales › Section 537.5 - Seller's, transferrer's or assignor's rights, obligations and liabilities

Current through Register Vol. 46, No. 28, July 10, 2024
(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.