a)
If any taxpayer, outside the usual
course of his or her business, sells or transfers the major part of any one or
more of:
1)
the stock of
goods which the taxpayer is engaged in the business of
selling, or
2)
the
furniture or fixtures, the machinery or equipment, or the real property of any
business that is subject to the provisions of the Act,
the purchaser or transferee of such assets shall, no
later than 10 business days prior to the sale or transfer, file a notice of
sale or transfer of business assets with the Department disclosing the name and
address of the seller or transferor, the name and address of the purchaser or
transferee, the date of the sale or transfer, a copy of the sales contract and
financing agreements, which shall include a description of the property sold,
the amount of the purchase price or a statement of other consideration for the
sale or transfer, the terms for payment of the purchase price and such other
information as the Department may reasonably require. If the purchaser or
transferee fails to file the above-described notice of sale with the Department
within the prescribed time, the purchaser or transferee shall be personally
liable for the amount owed under this Section by the seller or transferor to
the Department up to the amount of the reasonable value of the property
acquired by the purchaser or transferee. The seller or transferor shall pay the
Department the amount of tax, penalty and interest (if any) due from him or her
under the Act up to the date of the payment of tax. The seller or transferor,
or the purchaser or transferee, at least 10 business days before the date of
the sale or transfer, may notify the Department of the intended sale or
transfer and request the Department to audit the books and records of the
seller or transferor, or to do whatever else may be necessary to determine how
much the seller or transferor owes to the Department under the Act up to the
date of the sale or transfer. The Department shall take such steps as may be
appropriate to comply with the
request.
b)
Any order issued by the Department
pursuant to the Act and this Section to withhold from the
purchase price shall be issued within 10 business days after the Department
receives notification of a sale as provided in the Act and
this Section. The purchaser or transferee shall withhold such portion
of the purchase price as may be directed by the Department, but not to exceed a
minimum amount varying by type of business, as determined by the Department
pursuant to this Part, plus twice the outstanding unpaid
liabilities and twice the average liability of preceding filings times the
number of unfiled returns, to cover the amount of all tax, penalty and interest
due and unpaid by the seller or transferor under the Act or, if the payment of
money or property is not involved, shall withhold the performance of the
condition that constitutes the consideration for the sale or transfer. Within
60 business days after issuance of the initial order to withhold, the
Department shall provide written notice to the purchaser or transferee of the
actual amount of all taxes, penalties and interest then due and whether or not
additional amounts may become due as a result of unfiled returns, pending
assessments and audits not completed. The purchaser or transferee shall
continue to withhold the amount directed to be withheld by the initial order or
such lesser amount as is specified by the final withholding order or to
withhold the performance of the condition which constitutes the consideration
for the sale or transfer until the purchaser or transferee receives from the
Department a certificate showing that such tax, penalty and interest have been
paid or a certificate from the Department showing that no tax, penalty or
interest is due from the seller or transferor under the Act.
c)
The purchaser or transferee is
relieved of any duty to continue to withhold from the purchase price and of any
liability for tax, penalty or interest due under the Act from
the seller or transferor if the Department fails to notify the purchaser or
transferee in the manner provided in this Section of the
amount to be withheld within 10 business days after the sale or transfer has
been reported to the Department or within 60 business days after issuance of
the initial order to withhold as the case may be. The Department shall have the
right to determine amounts claimed on an estimated basis to allow for non-filed
periods, pending assessments and audits not completed, however, the purchaser
or transferee shall be personally liable only for the actual amount due when
determined.
d)
If
the seller or transferor fails to pay the tax, penalty and interest (if any)
due from him or her under the Act and the Department makes
timely claim therefor against the purchaser or transferee as provided in
subsection (b), then the purchaser or transferee shall pay the amount so
withheld from the purchase price to the Department. If the purchaser or
transferee fails to comply with the requirements of Section 5j of the
Act, the purchaser or transferee shall be personally liable to the
Department for the amount owed under the Act by the seller or transferor to the
Department up to the amount of the reasonable value of the property acquired by
the purchaser or transferee.
e)
Any person who shall acquire any
property or rights thereto which, at the time of such acquisition, is subject
to a valid lien in favor of the Department shall be personally liable to the
Department for a sum equal to the amount of taxes secured by such lien but not
to exceed the reasonable value of such property acquired by that
person. (Section 5j of the Retailers' Occupation Tax Act)
f) Examples of situations where bulk sales
reporting is required:
1) When a store selling
clothing and shoes sells the clothing inventory of the business to another
entity, bulk sales reporting is required.
2) When a company sells its business on a
contract for deed basis, bulk sales reporting is required when the contract is
entered into.
g)
Examples of situations where bulk sales reporting is not required:
1) When a corporation is merged into another
corporation pursuant to the Business Corporation Act of 1983 [805 ILCS 5],
there are no bulk sales reporting requirements because the surviving
corporation retains all of the liabilities of the merged corporation.
2) When one or more corporations are
consolidated into a new corporation pursuant to the Business Corporation Act of
1983 [805 ILCS 5], there are no bulk sales reporting requirements because the
new corporation retains all of the liabilities of the consolidated
corporations.
3) A repossession of
equipment and inventory by a lender upon default by a borrower does not
constitute a transfer within the meaning of the bulk sales provisions of the
Act. For example, when a company is in default on a loan for business furniture
and fixtures and the holder of the security interest forecloses and enters the
business to repossess the furniture and fixtures, bulk sales reporting is not
required.
4) A transfer of the
majority of assets from one location to another location where a business has
multiple locations and operates such locations under the same certificate of
registration number is not a transfer that requires bulk sales
reporting.