(a) The liability of the purchaser,
transferee or assignee shall be finally and irrevocably fixed unless the
purchaser, within 90 days after the date of the mailing of the notice (the
90-day notice) by the Division of Taxation to him of the total amount of any
tax or taxes which the State claims to be due from the seller, transferrer or
assignor, applies to the Division of Tax Appeals for a hearing or to the Bureau
of Conciliation and Mediation Services of the Division of Taxation for a
conference.
(b) The rules of
practice and procedure contained in Parts 2394 and 3000 of this Title apply to
the assessment of liability against the purchaser.
(c) The purchaser, transferee or assignee has
the burden of proof to establish that the assessment issued against him is not
correct.
(d) The
purchaser, in his
petition, may challenge the assessment on any grounds that establish that the
assessment is incorrect, including:
(1) that
the transfer is not a
bulk sale as defined in section
537.1 of
this Part;
(2) that the
purchaser's
notice was proper and timely in accordance with the provisions of section
537.2
of this Part;
(3) that the amount
of funds withheld by the
purchaser from the
seller was sufficient and in
accordance with the requirements of section
537.3
of this Part;
(4) that the
Department of Taxation and Finance has failed to meet its obligations provided
for in section
537.6
of this Part;
(5) that the amount
of the liability exceeds the purchase price or the fair market value of the
items purchased; or
(6) any
combination of the foregoing paragraphs (1) through (5).
(e) The
purchaser may also challenge the
assessment on the grounds that the amount determined by the Division of
Taxation to be due from the
seller is erroneous or excessive, whether or not
such amount had been finally and irrevocably fixed against the
seller.
Example 1:On April 15, 1975, a determination was issued
against a corporation assessing unpaid sales taxes in the amount of $5,000,
plus penalty and interest. The corporation failed to apply for a hearing to
review the determination and the assessment had become finally and irrevocably
fixed against the corporation. Four years later, on April 15, 1979, the
corporation sold its business assets in bulk to a purchaser for $100,000. The
purchaser failed to give notice to the Department of Taxation and Finance or
withhold the funds from the seller. Furthermore, the purchaser did not pay $500
sales tax imposed on the sale of tangible personal property which was included
in the business assets sold to him. From information received from the seller,
the Division of Taxation ascertained that a bulk sale had taken place and that
subsequent to the date of the assessment, but prior to the date of sale of the
assets, the seller-corporation had failed to collect $6,000 in sales taxes from
its customers which the State claims should have been collected. One year later
on April 15, 1980, an additional assessment was issued against the
seller-corporation for $6,500, which amount included both the $6,000 the seller
failed to collect from his customers prior to the bulk sale and the $500 sales
tax on the taxable tangible personal property included in the assets sold in
bulk, plus appropriate penalty and interest. On that date, the Division of
Taxation mailed a notice to the purchaser of the $11,500 claimed to be due from
the seller ($5,000 plus $6,500). On May 15, 1980, the purchaser filed his
application for a hearing. The seller did not file. The purchaser may challenge
the $11,500 liability asserted against him on the grounds that both the $5,000
and the $6,500 assessment issued against the seller were excessive.
(f) The purchaser is entitled to
examine the returns of the seller and any other information in the possession
of the department with respect to any sales taxes due from the seller, but only
those portions of such returns or other information which are pertinent to the
issue of the purchaser's liability.
(g) A
purchaser is entitled to a hearing with
the Division of Tax Appeals or a conference with the Bureau of Conciliation and
Mediation Services of the Division of Taxation to review a denial of his
application for refund of tax determined to be due from the
seller, whether or
not the
seller's liability has been finally and irrevocably fixed, where the
purchaser has paid the tax to the Department of Taxation and Finance and has
applied for said hearing or conference within 90 days from the date of denial
of his application for a refund; provided, however, that the
purchaser has
filed his application for a refund within two years after the giving of notice
by the Division of Taxation to such
purchaser of the total amount of the tax
which the State claims to be due from the
seller.
Cross reference:For the rules and regulations concerning
proceedings before the Division of Tax Appeals and review of their decisions by
the Tax Appeals Tribunal see Part 3000 of this Title. For the rules and
regulations concerning proceedings before the Bureau of Conciliation and
Mediation Services of the Division of Taxation see Part 4000 of this
Title.
