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- Buying a Gas Station or Car Wash you Need Landlord Consent - No Matter What the Lease Says
- $22 Million New York City Entrepreneur Fund Created for Starting Businesses in New York City
- Small Business Commercial Lease Agreements in New York: Limiting your Personal Guaranty may Not be Enough
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Business Transactions
- The Advantages of an Asset Purchase Compared to a Stock Purchase
- Factors to Consider when Buying a Gas Station
- The Importance of a "Financing Contingency" when Buying a Business
- The Importance of a "Non-Compete" when Buying a Business
- The Importance of "Sales Tax Notifications" when Buying a Business in New York
The Importance of "Bulk Sales Tax" Notices when Buying a Business in New Jersey
For business transactions occurring in the State of New Jersey, the New Jersey State Division of Taxation imposes an absolute liability and obligation on the New Jersey business "purchaser" to provide the State with a "pre-closing" notification of the proposed business sale, the terms of the sale and the anticipated date of closing. This pre-closing notification, referred to as a "Bulk Sales Notice" (but formally identified by the State as a "Notification of Sale, Transfer or Assignment in Bulk") should be prepared by your business attorney and must be filed with the New Jersey State Division of Taxation no less than 10 days prior to the business closing. The purpose of this notification is to assist the State with their sales tax audit and collection efforts, i.e., when the taxation authority receives the notification, the State will examine the "seller's" tax records and make a determination as to whether or not the "seller's" tax records are current and whether or not the "seller" owes any outstanding sales tax. If outstanding sales taxes are due by the "seller", the State of New Jersey imposes a liability and obligation on the business "purchaser" to pay the "seller's" outstanding sales tax from the business purchase proceeds due from the purchaser to the seller at closing.
Procedurally, the bulk sales notice must be timely pre-filed with the New Jersey Division of Taxation. Once this notice is timely pre-filed, the State will review the Seller's tax records and make a determination as to an amount due or an amount to be set aside and held in escrow at closing. Provided that you have timely notified the State and have set aside the appropriate escrow of funds demanded by the State, you may proceed with the closing without any further liability for the seller's sales taxes.
If you fail to comply with the New Jersey State bulk sale notification and collection obligations, the State of New Jersey can and will hold you personally responsible for the payment of the seller's outstanding pre-closing sales taxes. This obligation may be substantial and is an unnecessary problem that occurs in far too many transactions. While this issue must be addressed by your business attorney, it is important that, as a business purchaser, you be aware of this "hidden" liability.
Charles N. Internicola, is a business attorney, author and speaker who represents individuals, entrepreneurs and established business owners in New York and New Jersey business transactions. Charles is the author of "An Entrepreneurs Guide to Purchasing a Business" and he is the publisher of the "New York Franchise Law Blog". If you are buying or selling a business in New York or New Jersey, purchasing a franchise or involved in a license or lease transaction Contact Charles Internicola to discuss the dedicated and precise legal representation that he provides to his clients and the steps that he will take to protect your business interests.
IMPORTANT DISCLAIMER: The information contained on this website is provided for general educational purposes only, should not be relied on as legal advice and does not serve to create an attorney client relationship. In utilizing this website you acknowledge that there is no attorney client relationship between you and Charles N. Internicola, Esq. and that the information contained on this site does not and cannot serve as a replacement for the competent legal advice of a licensed attorney in your state. The content of this website is subject to the Copyright of its author, Charles N. Internicola, Esq.
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