Effective January 1, 2024, Indiana began imposing successor liability for past-due taxes in certain transactions involving the transfer of assets. This successor’s liability applies to transactions that close on or after February 14, 2024 in which a business owner transfers over 50 percent of the business’s tangible personal property to another person. Transfers of tangible personal property occur and successor liability may be triggered even if the seller does not receive any consideration.
To comply with the new requirements for such sales, either the seller or the purchaser must file a Notice of Transfer in Bulk with the Indiana Department of Revenue (“DOR”) at least 45 days prior to the transfer or sale. The Notice of Transfer in Bulk must include a copy of the signed purchase agreement. Upon filing and approval for release of tax information by the seller, DOR may provide the purchaser a summary of the seller’s tax liabilities for the purchaser to determine how much the purchaser must withhold from the sales price. If the seller has no outstanding tax liabilities or past due returns, DOR will mail the seller and successor a Tax Clearance Letter within 20 days of receipt of the Notice of Transfer in Bulk, which is valid for 60 days. Failure to timely file Notice of Transfer in Bulk and comply with withholding requirements may result in the purchaser becoming liable for any sales tax, use tax, food and beverage tax, or county innkeeper’s tax due including penalties and interest, of the seller up to the amount of the purchase price or value of the tangible personal property.
Because successor liability cannot be altered by any agreement or contract between the seller and purchaser, businesses interested in purchasing or transferring a business’s tangible personal property should consult their tax advisors to ensure timely compliance with the new law. We can help.
