5.
(a)As used in this section, the following
terms have the following meanings:
(1)"Successor in liability" means a person that directly or
indirectly purchases, acquires, is gifted, or succeeds to ownership
of more than one-half (1/2) of all tangible personal property of a
business, by value, including inventory, at all locations combined,
as measured by the value of the property at the time of the
transfer. "Successor in liability" does not include a personal
representative or beneficiary of an estate, a trustee in bankruptcy,
a debtor in possession, a receiver, a secured party, a mortgagee,
an assignee of rents, or any other lienholder. A person shall only
be considered a successor in liability to the extent that:
(A)a department lien or liens exist on tangible personal
property tran
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5. (a) As used in this section, the following
terms have the following meanings:
(1) "Successor in liability" means a person that directly or
indirectly purchases, acquires, is gifted, or succeeds to ownership
of more than one-half (1/2) of all tangible personal property of a
business, by value, including inventory, at all locations combined,
as measured by the value of the property at the time of the
transfer. "Successor in liability" does not include a personal
representative or beneficiary of an estate, a trustee in bankruptcy,
a debtor in possession, a receiver, a secured party, a mortgagee,
an assignee of rents, or any other lienholder. A person shall only
be considered a successor in liability to the extent that:
(A) a department lien or liens exist on tangible personal
property transferred to the person;
(B) all tax due by the transferring business to the extent that
notice was not provided to the department as required by
subsection (b); or
(C) any tax due was included in the summary mailed to the
successor in liability by the department pursuant to subsection
(c).
(2) "Purchase price" means the consideration paid or to be paid by
the successor in liability to the transferring business for the
transfer of tangible personal property. "Purchase price" also
includes debts assumed or forgiven by the successor in liability,
or real or personal property conveyed or to be conveyed by the
successor in liability to the transferring business.
(3) "Arm's-length transaction" means a transfer for adequate
consideration between independent parties both acting in their
own best interests. If the parties are related to each other, a
rebuttable presumption arises that the transaction is not at arm's
length.
(4) "Transfer" means every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of disposing of or parting
with a business or an interest in a business, or a stock of goods,
whether by gift or for consideration. "Transfer" includes a change
in the type of business entity or the name of the business, where
one (1) business is discontinued and a new business is started.
"Transfer" also includes the acquisition by a new corporation of
the assets of a prior business in exchange for the stock of the new
corporation. "Transfer" does not include an assignment for the
benefit of creditors, foreclosure or enforcement of a mortgage,
assignment of rents, security interest or lien, sale or disposition in
a bankruptcy proceeding, or sale or disposition by a receiver.
(5) "Transfer in bulk" means a transfer, other than in the ordinary
course of the transferor's trade or business, of more than one-half
(1/2) of all the tangible personal property of a business, by value,
including inventory, at all locations combined, as measured by the
value of the property at the time of the transfer.
(6) "Tax" means the gross retail tax imposed by IC 6-2.5-2-1, the
use tax imposed by IC 6-2.5-3-2, and any county innkeepers tax
or food and beverage tax imposed by IC 6-9.
(7) "Good cause" means the inability to comply with the statutory
requirements of this section due to force majeure, fraud, failure of
delivery by a carrier, or similar circumstances beyond the control
of the successor. Lack of knowledge by the successor in liability
of the requirements of this section shall not be considered good
cause. Failure of a transferee or third party to provide the notice
required by subsection (b) pursuant to a contractual obligation or
informal understanding shall not be considered to be good cause.
(b) Whenever a business engages in a transfer in bulk, at least
forty-five (45) days before taking possession of the assets or paying the
purchase price, the potential successor in liability or the transferring
business shall notify the department of the transfer and the terms and
conditions related to the transfer on a form prescribed by the
department. The notice must include the tax identification number of
the transferring business and the potential successor in liability.
(c) The following apply:
(1) If the notice is not provided to the department as required in
subsection (b), the potential successor in liability becomes the
successor in liability and becomes liable for any unpaid taxes,
interest, and penalties due from the transferring business to the
extent of the purchase price.
(2) If the notice is provided as required in subsection (b) and,
within twenty (20) days after receipt of the notice, the department
places a summary in the United States mail addressed to the
successor in liability specifying that tax liabilities exist in addition
to those subject to a department lien or there are tax returns due
but not filed, the successor in liability is liable for all taxes,
interest, and penalties as stated in the department's summary to
the extent of the purchase price if the successor in liability pays
the purchase price or takes possession of the assets without
withholding and remitting the liability to the department. The
successor in liability is liable whether the purchase price is paid
or the assets are transferred prior to or after notification from the
department.
(3) If the department does not find any tax is due from the
transferring business or that the transferring business has failed
to file any returns that are due, the department must place a tax
clearance letter in the United States mail addressed to the
potential successor in liability within twenty (20) days after
receipt of the notice required by subsection (b) specifying that no
tax liabilities exist and that the transferee is not a successor in
liability. The department shall issue the tax clearance letter even
if the department determines that the transfer at issue does not
constitute a transfer in bulk pursuant to subsection (a).
(d) If, based upon the information available, the department
determines that a transfer in bulk was not at arm's length or was a gift,
the successor's liability under this section equals the value of the
tangible personal property transferred. Upon such a determination, the
department may require that the successor in liability provide a third
party valuation of the tangible personal property transferred.
(e) In the case of a gift resulting in successor liability under this
section, the return of the gifted property by the donee to the donor
releases the donee's successor liability.
(f) A potential successor in liability that complies with the
requirements of subsections (b) and (c) is not liable for any
assessments of taxes of the transferring business made after the
department provides a summary to the potential successor in liability
under subsection (c), except for taxes assessed on returns filed to
comply with the summary. If the department fails to place the required
summary in the United States mail within the twenty (20) day period,
the potential successor in liability is not liable for any taxes of the
transferring business, except with regard to transfers subject to
subsection (d), if the purchase price is paid and the potential successor
in liability takes possession of the assets within sixty (60) days of the
mailing date the notice required pursuant to subsection (b). If the
purchase price is not paid or the potential successor in liability does not
take possession of the assets within sixty (60) days of the mailing date
of the notice required pursuant to subsection (b), the potential
successor in liability or the transferring business must submit a new
notice pursuant to subsection (b).
(g) If the required notice under subsection (b) is not filed or any tax
liability included in a summary mailed by the department pursuant to
subsection (c)(2) remains due after the purchase price is paid or the
successor in liability takes possession of the assets, the department
must issue a notice of proposed assessment to the successor in liability
for any such tax due.
(h) A successor in liability may protest the underlying tax unless the
transferring business has already exhausted its protest rights with
regard to the underlying tax. A successor in liability may also protest
whether they qualify as a successor in liability with regard to the tax.
In addition, the successor in liability may protest by submitting
evidence showing good cause for not submitting the required notice or
completing the purchase before receiving a clearance letter from the
department. In the event that the transferring business has protested any
taxes identified in the department's notice mailed pursuant to
subsection (c)(2), the potential successor in liability shall not be
considered a successor in liability with respect to such taxes if the
potential successor in liability places an amount in escrow sufficient to
satisfy such taxes pending resolution of the transferring business's
administrative and legal process protesting such taxes.
(i) A transfer in bulk shall not constitute a retail transaction except
for any inventory, motor vehicles, watercraft, aircraft, or rental property
transferred.
(j) A transferor in bulk and any responsible officer thereof shall not
be relieved of liability for any tax, interest, or penalties when a
successor in interest also becomes liable for the tax, interest, and
penalties. No owner, shareholder, director, officer, or employee of a
successor in liability shall be considered to be a responsible officer
relative to any tax, interest or penalties owed by the purchaser as a
successor.
(k) The department has discretion in assessing and collecting the tax
due from any liable party, but the department cannot collect more than
the total tax, interest, and penalties imposed. The ability of the
department to impose collections fees on the liable parties as otherwise
allowed by this article shall not be impacted by this section.