By Guest Contributor Gregory A. May, Esq. – www.kieselandmay.com
Do you know of any business owners willing to subject themselves to a full audit by the Florida Department of Revenue? Or better yet, do you know of any buyers willing to accept the unknown risk of a seller’s prior sales tax liability?
The answer is a resounding “NO”; however prior to April 6, 2012 Florida Statutes provided that a buyer could assume, for up to three years, the past sales and use tax liabilities of a prior business owner unless an audit was conducted by the FDOR or a certified sales tax auditor. See §§213.758, 213.053, 213.10, 212.10 and 202.31, 2011 Florida Statutes.
This left business people in a precarious position as buyers were not willing to take the risk of assuming the seller’s tax liabilities, while sellers did not want to subject themselves to a full audit. Thankfully, in April 2012 Florida legislators created a solution, which in pertinent part, can be simplified as follows:
The purchasers of a business can avoid sales and use tax liabilities of a prior business if:
The buyer obtains a certificate of compliance from DOR showing that the seller (1) has not received notice of audit, (2) seller has filed all required tax returns and paid the tax due from those returns, and (3) there are no insiders in common between the buyers and sellers; OR
The DOR conducts an audit, at the buyer or seller’s request, and finds that the seller is not liable for any tax. See §213.758, Florida Statutes.
The bottom line is that buyers should be sure that the transaction is closed by a qualified closing attorney, and that a proper lien and tax search is conducted before closing.
Happy negotiating and good luck in your new business!
Gregory A. May, Esq.
Kiesel and May, Attorneys at Law
2121 McGregor Boulevard
Fort Myers, Florida 33901
T: (239) 334-1800
F: (239) 332-3927
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907