When the Minnesota Department of Revenue has a
lien filed against a business and more than half of the assets are purchased, acquired or transferred as a gift a
successor is required to notify the department of a pending transfer of ownership.
It is the successor’s responsibility to search for undisclosed tax liens before completing a purchase agreement.
Notifying the Department
The successor may use Form C50, Notice of Business Transfer, or send a copy of the lien along with related purchase agreement pages. The notice must:
- Include the transferring business’ tax identification number (TIN).
- Include the terms and conditions related to the transfer.
- Be received by the department at least 20 days before the transfer.
The department will review and respond to the notice. The successor will be advised of:
- The amount needed to satisfy the liens.
- Additional sales and withholding debts not included on the liens.
- Unfiled sales and withholding tax returns due.
- Any other debts other than those listed on the lien.
- The amount the successor must withhold and pay the department to satisfy the lien and debts not included on the liens.
- How to pay the withheld amount to the department.
If the department does not contact a successor within 20 days of receiving the transfer, the successor will be liable for only the tax, penalty and interest for the periods included on the lien. However, the successor can be issued a
levy to collect the additional debt.
Successors who comply with the requirements to notify the department, withhold and remit payment will not be liable for additional assessments.
Failing to Notify the Department
If a successor does not notify the department of the transfer or does not remit the amount due, an Order Assessing Successor Liability is issued. The successor may be held liable for the delinquent sales tax, withholding tax, penalty and interest.
The successor’s liability will not exceed the fair-market purchase price. The purchase price includes:
- Funds paid or to be paid for the business.
- Assets being transferred.
- Debts assumed or forgiven by the successor.
- Value of any assets given in trade or exchange for the business or assets being transferred.
The statute of limitations (SOL) for assessment is equal to the period of time available to collect the debt from the transferring business. The successor has 60 days from the assessment date to request an administrative review or to appeal to Minnesota Tax Court.
