Under the Wisconsin sales tax laws, the purchaser of a business can be subject to the predecessor business’ unpaid sales tax liability. The extent of successor liability for sales taxes, however, is limited to the amount of the purchase price paid for the business. Therefore, if someone pays a half-million dollars for a business that has a million dollar sales tax liability, the purchaser’s exposure for the unpaid tax will be limited to a half-million.
It follows, therefore, that if there is no purchase price, there is no successor liability. Further, the successor liability is tied to the location of the business purchased. If only one location of an existing chain of businesses is purchased, successor liability is limited to the sales tax liability attributable to that one location.
It is important to note, however, that while the successor liability is limited to the amount of the purchase price, the “purchase price” consists of any value that is paid for the business. This purchase price includes not only cash or installment payments but also value of any property transferred in exchange for the business and the assumption or payment of any debt on behalf of the purchased business. Using the above example, even if the entire half-million dollar purchase price is paid to secured creditors of the business, the purchaser can still face successor liability to the extent of that half-million dollars.