If you are buying the assets of a Texas business (but not assuming any of its liabilities), you cannot
be held liable for any of the business's liabilities, correct?
Wrong. A potential source of successor liability for the
purchaser of a business is Section 111.020 of the Texas Tax Code.
If a business or stock of goods (inventory) of a business is
sold, the purchaser will be liable for the seller’s taxes due to the Texas
Comptroller’s office (such as sales, excise, use and franchise taxes), unless
the purchaser withholds a portion of the purchase price equal to the amount the
seller owes to the Texas Comptroller’s office (including, if applicable, any
interest or penalties thereon).
Fortunately, the purchaser of a business may protect itself
from successor liability under Section 111.020 of the Texas Tax Code by requesting
that the Comptroller issue a certificate stating that no tax is due from the
seller. Surprisingly enough, that certificate
is called a "Certificate of No Tax Due"!
The Comptroller must issue the Certificate of No Tax Due (or
a statement setting forth the amount of taxes due) within 60 days after
receiving the request (or within 60 days of the seller making its records
available for audit), but in either event within 90 days after the date of
receiving the request.
The Texas Comptroller’s office has a useful guide to
Certificates of No Tax Due called “Tax Information: Buying an Existing Business” which is
available here.
