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Last Updated: 12/17/2018

Successor Liability

If you buy or acquire a business, or the stock of goods of a business, you are a successor. Successors must notify the Minnesota Department of Revenue before the transfer takes place. If you do not notify us, it may increase your liability for tax debts or other debts we are collecting from the business.

Checking for Liens 

You are also responsible for searching for undisclosed tax liens before completing a purchase agreement. (See Minnesota Statute 270C.57.) This law protects you as a buyer. Checking for liens tells you of any tax obligations for the business you intend to purchase. Use this information to negotiate the purchase price so the legal obligations are satisfied before you take ownership.

You must search for tax liens filed by us. Liens may be found in the county recorder's office where the business:

  • owns real property

  • is located

  • owner lives, if the business is a sole proprietorship

You may also find liens recorded in the 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, respond to the notice, and 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 

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

Assessed Businesses

If you purchase a business that has already been assessed for successor liability, you cannot be personally assessed for the same debts. In these situations, we can only assess you for personal liability on debts that originate on or after the date you acquired the business.