a)
If any taxpayer, outside the usual course of the taxpayer's
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 and 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
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 such request under this Section
.
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 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 this Section or under 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. (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 company
enters into the contract.
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.
