Wednesday, November 5, 2008

Sales Tax- Challenging Successor Liability

If successor liability is asserted against the successor business, the challenges are similar to those of dealing with an initial tax liability. There will likely be a determination of the amount for which the buyer could be liable. This provides an opportunity to resolve the issue before the Department determines that a successor should be responsible for the tax. The analysis will include a consideration of the amount of the purchase price that was paid, the amount of the tax due by the predecessor and possibly whether statutory requirements for a Sales Tax Clearance Certificate were satisfied. If the opportunity to resolve the matter with the Auditor is unsuccessful or missed, the same or similar issues can be addressed at the Resolution/Appeals Unit of the Department of Revenue.

When dealing with successor liability for Wisconsin sales or use taxes, the best method for resolving an issue is to avoid having it in the first place. Where that is not possible, it is important to respond and react to the Department of Revenue’s actions to provide the broadest variety of resolutions possible. There are, however, several opportunities to try and resolve the debt before it becomes final and it is always a good idea to take advantage of the procedures in place to solve existing or potential problems.

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