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    4 Replies Latest reply on Feb 8, 2009 10:36 AM by dublincpa

    Sales Tax owed by previous owner.

    jsabella49 Newbie
      I own a small coffee shop in NJ that I purchased in 2001. Am I liable for sales tax that was determined to be owed by the previous owner?
        • Re: Sales Tax owed by previous owner.
          Lighthouse24 Ranger
          It really depends on the type of transaction you used to buy the business and the terms of the agreement. For example, if the previous owner was a sole proprietor and you simply bought the physical assets of the business (building, fixtures, inventory, tradename, etc.) from him/her, then probably not. If the previous owner was a corporation and you bought the all the shares of that company to obtain ownership, then possibly so -- unless the terms of agreement stated otherwise (which a good agreement, from your perspective, should have).

          I'm not sure about NJ, but in most states an indicator would be whether you (a) filed/registered for a new Sales Tax and Use Permit yourself when you took over the business (in which case, the former owner would be on the hook), or (b) continued to utilize a permit/account that was associated with the business entity before you took over (in which case, you'd probably be on the hook for unpaid taxes, unless your purchase agreement said otherwise).

          Hope that helps. Welcome to the community and good luck.
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          • Re: Sales Tax owed by previous owner.
            LUCKIEST Guide
            Sales Tax owed by previous owner

            WHO are you?? It is very hard to answer your question if you do NOT share.

            Go to Members page and share some info.

            Do you have a Lawyer?? What was in the purchase agreement??
              • Re: Sales Tax owed by previous owner.
                dublincpa Scout
                There are two questions. Do you have to pay the state? If you have to pay the state, can you get the money back from the owner?

                I don't know about elsewere. In Illinois, the state couldn't care less what your deal was as far as asset vs. stock sale. The new owner is responsible to the state for the unpaid sales tax. Then your deal kicks in as to whether you have recourse against the prior owner. And then of course whether you can actually collect if you do have recourse.