Tax Type
Retail Sales and Use Tax
Description
Liability of the predecessor company assumed by purchaser upon purchase
Topic
Appropriateness of Audit Methodology
Date Issued
10-13-1982
October 13, 1982
Re: 58-1118 Application/Sales & Use Tax
Dear***********
This letter will respond to your correspondence of August 3, 1982 in which you applied for correction of sales and use tax assessed against ********** as a result of a recent audit.
Facts
The assets of ********* (hereinafter ******* ) were purchased by you in March 1981. Paragraph 3 of the sales agreement indicated that you would assume the trade accounts payable of the prior business. Included in the accounts payable were charges for tangible personal property purchased by the predecessor corporation but paid by *********. On audit, tax was assessed on the amounts paid by *****on which no tax was included and the use of which could not be determined.
You contest the audit assessment with respect to predecessor corporation liabilities.
Determination
Virginia Code § 58-441.30 provides that upon the sale of a business, the successors or assigns shall:
-
- withhold sufficient of the purchase money to cover the amount of such taxes, penalties, and interest due and unpaid until such former owner shall produce a receipt from the Commissioner showing that they have been paid or a certificate stating that no taxes, penalties, or interest are due. If the purchaser of a business or stock of goods shall fail to withhold the purchase money as above provided, he shall be personally liable for the payment of the taxes, penalties, and interest due and unpaid on account of the operation of the business by any former owner.
- withhold sufficient of the purchase money to cover the amount of such taxes, penalties, and interest due and unpaid until such former owner shall produce a receipt from the Commissioner showing that they have been paid or a certificate stating that no taxes, penalties, or interest are due. If the purchaser of a business or stock of goods shall fail to withhold the purchase money as above provided, he shall be personally liable for the payment of the taxes, penalties, and interest due and unpaid on account of the operation of the business by any former owner.
The provisions of § 58-441.30 are clearly applicable to the instant case. ********as a successor corporation, assumed the outstanding tax liabilities of the predecessor corporation. Sales tax not included on accounts payable was a liability of the predecessor company assumed by ********** upon purchase under the provisions of § 58-441.30. In the absence of verification of the exempt status of the transactions in question, we have no alternative but to rule that *******is liable for the tax.
Therefore, based upon the foregoing, I find no basis for granting relief from this assessment. If you desire a hearing, please advise us within thirty (30) days. Otherwise, this determination letter shall be final.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner