A transferee liability exists when assets are transferred for less than fair-market value and a tax debt exists or is pending. The Minnesota Department of Revenue can hold the transferee liable for the transferor’s tax debts.
The transferee can be assessed tax, penalty, interest and other charges. The transferee assessment will not exceed the fair-market value of the assets unless the transferee assumed liability in the transfer.
A transferee’s assumption of liability means that the department can assess liability for the full amount of the debt regardless of the value of the assets.
View the statute (Minnesota Statutes, section 270C.58).
Other circumstances in which a transferee can be assessed include:
- The transferee is a continuation of the transferor corporation.
- The transaction is either a consolidation or a merger.
- The transaction leaves the transferor without assets to pay tax debts.
In addition to the recipient of assets (the transferee), the department can also assess:
- Personal Representatives
- Guardians and others authorized or permitted by law to act for the person
- Trustees, receivers, assignees, or other conservators
The length of time the department has to access and collect the debt is displayed below:
||Up to one year after the statute of limitations expire for assessing a transferor.
||Up to one year after the time for enforced collection action against a transferor expires.|
||Up to one year after the statute of limitations expires for assessing preceding transferee, but no more than 3½ years after the time to assess the original debtor expires.
||Up to one year after the time for enforced collection action against preceding transferee expires, but no more than four years after the time to collect from the original debtor expires.|
The department cannot take enforced collection actions if court proceedings are pending against the original debtor or a transferee.
Imposed tax, including personal and corporate income taxes and withholding taxes, may be included in the assessment. Sales taxes cannot be included. View the statute (M.S. 290