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Last Updated: 7/2/2018

Successor Liability

If you buy or acquire a business, you must notify the Minnesota Department of Revenue before the transfer takes place. If you do not notify us, it could increase your liability for tax debts or other debts we are collecting from the business. You are responsible to search for undisclosed tax liens before completing a purchase agreement. (See Minnesota Statute 257C.57.)

Checking for Liens

After deciding to buy a business, you must search for tax liens filed by us. Liens may be recorded at the:

  • county recorder's office where the business is located
  • county recorder's office where the owner lives, if the business is a sole proprietorship
  • Office of the Secretary of State

Notifying the Department

If you find a lien, you 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

We will review and respond to the notice. We will provide the following information:

  • The amount needed to satisfy any lien we have on the business.
  • The amount of any sales tax, withholding tax, or other debts that are not listed on the lien.
  • Any missing (unfiled) sales tax or withholding tax returns that are due.
  • How much you must withhold or pay to satisfy the lien and any debts not included on it.
  • How to pay the amount due.

If you meet the notification, withholding, and payment requirements, you will not be liable for any additional assessments related to the lien and other debts owned by the previous owner.

Note: If you notify us of a business transfer and we do not contact you within 20 days of receiving your notice, you will be liable for only the tax, penalty, and interest for the periods included on the lien.

Failing to Notify the Department

If you buy or acquire a business and do not notify us of the transfer or pay the amount due, we will:

  • issue an Order Assessing Successor Liability
  • hold you liable for past due sales tax, withholding tax, penalties, and interest
  • file a lien against you and take other legal actions to collect the business’s tax debt
Note: We may abate (cancel or reduce) the penalties and interest if you can show reasonable cause why you did not notify us of the transfer.

Your liability will not exceed the fair-market purchase price, which includes any:

  • current and future payments you make to buy the business
  • assets being transferred to you
  • debts you assume or forgive as part of the purchase or transfer
  • assets you give the previous owner in trade or exchange for the business