Friday's Tax Quote

“We have long had death and taxes as the two standards of inevitability. But there are those who believe that death is the preferable of the two. ‘At least,’ as one man said, ‘there’s one advantage about death; it doesn’t get worse every time Congress meets.’”

- Erwin N. Griswold

Sales Tax- Challenging Successor Liability

If successor liability is asserted against the successor business, the challenges are similar to those of dealing with an initial tax liability. There will likely be a determination of the amount for which the buyer could be liable. This provides an opportunity to resolve the issue before the Department determines that a successor should be responsible for the tax. The analysis will include a consideration of the amount of the purchase price that was paid, the amount of the tax due by the predecessor and possibly whether statutory requirements for a Sales Tax Clearance Certificate were satisfied. If the opportunity to resolve the matter with the Auditor is unsuccessful or missed, the same or similar issues can be addressed at the Resolution/Appeals Unit of the Department of Revenue.

When dealing with successor liability for Wisconsin sales or use taxes, the best method for resolving an issue is to avoid having it in the first place. Where that is not possible, it is important to respond and react to the Department of Revenue’s actions to provide the broadest variety of resolutions possible. There are, however, several opportunities to try and resolve the debt before it becomes final and it is always a good idea to take advantage of the procedures in place to solve existing or potential problems.

The Next President: Barack Obama

Barack Obama has won the 2008 U.S. Presidential Election. Congratulations are certainly in order. He has certainly accomplished something that few before him have been able to do.

As a tax lawyer, I am most interested in what the Obama administration will bring to the tax laws, tax policy and tax administration. Throughout his campaign he has made promises about certain changes in tax policy that he would like to see in place. With the democrats in control of both the legislative and executive branches, I expect that we’ll see some swift changes (including to the tax laws) in his first 100 days. I am looking forward to seeing how those changes take shape.

Don't Forget To Vote.

Today is an important day for our nation.  It is the day on which we choose those who would lead us for the next four years.  Regardless of your politics and whether you find social, economic or tax policy the driving force in the decision on whom to vote for, it is important that you make your voice heard.

SALES TAX - Successor Liability - Collecting the Unpaid Tax of a Predecessor Business

When the purchaser of a business faces the prospect of successor liability for Wisconsin Sales taxes, he or she (or it) may complain that the business first owing the tax should first be liable for the unpaid debt. This certainly seems like a reasonable complaint that is addressed in the Wisconsin Administrative Code.

The Administrative Code provides that the Department of Revenue should direct its collection efforts against the party that originally owes the tax. Case law has determined, however, that the party that originally owes the tax means the business that charged the sales tax in the first instance. It is this business that is the predecessor. Predecessor does not include any individuals that could have been personally responsible for the payment of the tax under the personal liability provisions of the sales tax statutes. That is, the Department of Revenue does not have to pursue the prior owners, officers or employees of a business that could be or are personally responsible for the predecessor’s taxes. While they must go after the predecessor business before seeking to collect the tax from the successor, the Department is under no obligation to pursue personal liability from the owners of the predecessor before seeking to recover from the successor business.

A practical reality is that the selling business is often no longer in business and therefore has no cash or assets available to pay the tax. Therefore, often the only real resort is ultimately to collect the unpaid sales tax from the successor.