Q: The state is telling me to pay sales and use tax that was due to be paid by the person that I bought the business from.
He did not file that he owed taxes and now they say I must pay them. Is there a way out.
A: Generally, if you purchase the entire business, the business remains liable for its obligations incurred under prior ownership. I would have an attorney review the sale documents. There may be representations and warranties in the purchase agreement that the business taxes were paid. If so, you may have recourse against the seller. If there are no purchase documents, it is unlikely you will get out of paying the taxes. Although, I would still recommend discussing the situation with a local business attorney.
A: Unfortunately, you appear to have purchased the stock of the company as opposed to its assets only, as a result of which you now are responsible for the debts and liabilities of the company (or, rather, the company remains liable). You may have recourse, however, against the seller, who should have warranted that all debts had been paid or disclosed. See a lawyer about your options.
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