Taxes paid when business sold

[snobdrblinkchik]

What is the name of your state (only U.S. law)? CA

In 2003 my parents sold their business. This was the 2nd business they sold and everything went smoothly. They just received a notice of levy from the State Board Of Equalization stating they owe $XXXX.

When i asked my dad about it, he said that when you sell a business any taxes owed would have to be paid off before the seller got ANY cut of the money. Is this true? Since today's a friday, I couldn't get a hold of the BOE office. If this is in the wrong forum can you please let me know where to move it to.

 

[davew128]

Ask your father for some sort of legal citation to support his assertion. When he fails to come up with one, you can say I told you so.

The ONLY time someone selling a business no longer is responsible for unpaid business taxes would be when they sell the STOCK in the company, if its even a corporation to begin with. Since its BOE you're dealing with, likely its unpaid sales tax. Even then, the seller is likely to have required all outstanding tax liabilities to have been paid.

 

[snobdrblinkchik]

Ask your father for some sort of legal citation to support his assertion. When he fails to come up with one, you can say I told you so.

not to sound like a smarta$$ or anything, but that's why i'm asking here..incase anyone ever heard of this. It kind of makes sense. If you owed any taxes, wouldn't you have to pay it all, before being able to collect on any money that is due back to you in the process of selling a business?

The ONLY time someone selling a business no longer is responsible for unpaid business taxes would be when they sell the STOCK in the company, if its even a corporation to begin with. Since its BOE you're dealing with, likely its unpaid sales tax. Even then, the seller is likely to have required all outstanding tax liabilities to have been paid.

It was a gas station, so yes, it probably has to do with sales tax. He was the seller of the business and i found some title escrow paper work that showed an itemized list of how much the business was sold for MINUS all expenses that needed to be paid (such as remaining amount of mortgage, taxes due, etc). What i can't decifer is which taxes were paid. i guess i'll just have to wait to talk to the BOE person on monday.

 

[davew128]

not to sound like a smarta$$ or anything, but that's why i'm asking here..incase anyone ever heard of this. It kind of makes sense. If you owed any taxes, wouldn't you have to pay it all, before being able to collect on any money that is due back to you in the process of selling a business?

Let me lay it out in plain English: NO. "Selling a business" doesn't tell me squat. Did he sell stock in a corporation or not?

It was a gas station, so yes, it probably has to do with sales tax. He was the seller of the business and i found some title escrow paper work that showed an itemized list of how much the business was sold for MINUS all expenses that needed to be paid (such as remaining amount of mortgage, taxes due, etc). What i can't decifer is which taxes were paid. i guess i'll just have to wait to talk to the BOE person on monday.

Sounds like he sold the assets and not the stock, which means yes he was/is on the hook for any outstanding tax liability.