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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 638
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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I am currently in the process of buying the assets ( chairs,

Resolved Question:

I am currently in the process of buying the assets ( chairs, tables, etc). The currrent owner owes approx. 10,000 in sales tax and another 17,000 in employment taxes. I have been told that since I am only buying the physical property and have a new name and tax ID number and liquor license that these liablities will be his problem and not be my problem is this true? By the way this is in Iowa
Submitted: 1 year ago.
Category: Tax
Expert:  Phillip B, EA replied 1 year ago.

Thanks for using JustAnswer.com!

Yes. By purchasing the assets and organizing under a new entity and EIN, you start with a clean business. No sales or employment tax liabilities will shift to your new entity. Make sure there are no liens on the assets that you acquire -- this would most likely only be a concern for vehicles or buildings.

The employment and sales tax liabilities of the seller remain with his old business tax ID. Since they are sales and employment tax liabilities, the IRS and the state will also collect from him personally.

If there are other questions, please reply to this answer so that I may assist you further.

If this answers your questions, please rate my service between OK and Excellent so that I may be paid for assisting you. Thanks for your business.

Customer: replied 1 year ago.


Thank you so much someone had me worried that this would be considered "successor business" and I looked up some tax code info that made me nervous stating that a successor business could be held liable if the original business owner failed to pay the outstanding tax liability. Based on your answer I'm guessing that would be true if I remained operating under corpoarte info.

Expert:  Phillip B, EA replied 1 year ago.
Correct, the successor business issue would only arise if you opened business under the former owners corporate structure. You should be safe, and I sure your CPA and attorney are also being cautious of this issue.

Let me know it there is any other questions. If not, please remember to rate my performance.

Thank you.
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 638
Experience: Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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