tax fraud by former business owner

[fdelta18]

What is the name of your state? CA

Im planning to purchase a business under a corporation in California. Would I still be held liable to the IRS if they audited the business and found out that there was fraud by the former owner in paying his taxes? What should I do to protect myself from any of these liabilities?

 

[Some Random Guy]

Do not purchase the business.

Purchase the assets of the business, including his customer contracts, accounts receivable, records, business name and logo. Contract to assume any leases (like buiildings and utilities) that you want to keep. Get an ironclad non-compete agreement from the current owner.

You don't want his legal hassles, just the pieces of his business that you need to function.

Get a lawyer who is experienced in these matters.

 

[fdelta18]

tax fraud by business owner

can we indicate a non liability clause of the buyer regarding any future disputes, liens, liabilities, etc. between the former owner and from the private or public sector on a purchase agreement? The business also requires business certification and licenses from the state. Would he be able to transfer these certification and licenses to me if I did purchase only the assets of the business, his business name, logo. I really have to do this as the business name is already an icon in the county.

 

[Some Random Guy]

You need to talk to an attorney about this, but in general I would not expect that you could transfer state certifications.

You can certainly include a non-liability clause if you purchase the business. However, I don't think that the IRS or others that would sue you are going to care. They will sue your business AND the former owner. If you lose in court, feel free to sue the former owner for him to make good on his promise to shield you from liability. At that point I doubt if he'll have any money left.

 

[fdelta18]

tax fraud by business owner

I understand that I really have to talk to an attorney on these matters.

But before it gets to the nitty gritty I would like to get a second opinion from this forum to see if Im on right track that can perhaps save me from wrong advises.

There was an advise given to me that if the former owner closes the his corporation and that my corporation will purchase the company and place it under the blanket of my corporation, he said that IRS or any government entity cannot pursue any liabilities but can pursue the former owner. Bottom line is my protection in purchasing a running business without the hassles of private and public sector running after me. Are there any rights for a buyer against future court litigations for failure of the former owner to renege his obligations to government?