Effective January 1, 2024, Indiana Code 6-8.1-10-9.5, enacted by SB 419, imposes new requirements for businesses engaging in sales of more than half of the tangible assets of the business (a “transfer in bulk”), through either an asset or stock sale for transfers occurring after February 14, 2024. The law holds successors liable for the seller’s past due sales, use, county innkeeper’s, and food and beverage tax, including penalties and interest up to the purchase price or value of the tangible personal business property transferred.

Under this new law, whenever a business engages in a “transfer in bulk,” the transferring business (Transferor) and potential successor in liability (Transferee) must notify the Indiana Department of Revenue (IDOR) of the transfer and the terms and conditions of the transfer (Notice) by completing IDOR’s Form 57309. This Notice must include the tax identification number of both the Transferor and Transferee, value and percentage of tangible business assets being sold and a list of closed and active Indiana tax accounts. The Notice must be signed by both parties and be delivered at least 45 days before taking possession of the assets or paying the purchase price for the transfer. Notices can be submitted to IDOR via INTIME e-service portal or by mail.

Whether a transfer constitutes a “transfer in bulk” is determined by measuring the tangible personal business property (furniture, equipment, fixtures, inventory, but excluding real estate) at all of the Transferor’s locations combined. If there are no outstanding tax liabilities, IDOR will issue a Tax Clearance Letter to both parties within 20 days of receipt of the Notice. However, if outstanding tax liabilities of the Transferor exist, then IDOR will issue a summary of those outstanding liabilities to the parties within 20 days of receipt of the Notice. A Tax Clearance Letter is valid for 60-days.

Parties to a transaction selling 50% or more of a seller’s tangible business assets should make sure to provide legal protections against successor liabilities in the purchase agreement, bill of sale or other transaction documents. If your business or client has any questions regarding the new Successor Tax Liability for Bulk Transfers, contact Ali Sylvia at Plews Shadley Racher & Braun LLP to help you navigate compliance with the new statutory requirements and avoid potential successor liability.

*With supplemental research provided by Cody Coldren

Categorized: News

Tagged In: business, IDOR, liability, property, Successor Tax Liability, Transfer in bulk