N.Y. Comp. Codes R. & Regs. tit. 20 § 537.2

Current through Register Vol. 46, No. 45, November 2, 2024

Section 537.2 - Notice of sale, transfer or assignment in bulk of business assets

(a) General. A notice of a sale, transfer or assignment in bulk of business assets from a purchaser must be in substantial compliance with section 1141(c) of the Tax Law in order for the 90-day period (for the giving of notice by the Division of Taxation of the total amount of the taxes due) to commence. The Department of Taxation and Finance, in its sole discretion, may waive any defect in the service, timeliness or contents of a notice of sale, transfer or assignment.

(b) Service.

(1) Such notice of a sale, transfer or assignment in bulk shall be given by the purchaser, transferee or assignee by:

(i) personal service (hand delivery), upon persons authorized by the Department of Taxation and Finance to accept such service, at the Bulk Sales Unit, Central Office Audit Bureau, Audit Division, Department of Taxation and Finance, State Campus, Albany, NY; or

(ii) United States registered mail to the Bulk Sales Unit, Central Office Audit Bureau, Audit Division, Department of Taxation and Finance, State Campus, Albany, NY 12227; or

(iii) United States certified mail--return receipt requested, to the Bulk Sales Unit, Central Office Audit Bureau, Audit Division, Department of Taxation and Finance, State Campus, Albany, N.Y. 12227; provided that the envelope or other wrapper containing the notice is delivered to an employee of the United States Postal Service who postmarks the sender's receipt for such envelope or wrapper.

(2) If service of the notice does not comply with the provisions of paragraph (1) of this subdivision, service shall be deemed defective, and the notice of no force and effect, unless and until such notice is actually received by the Bulk Sales Unit, Central Office Audit Bureau, Audit Division, State Campus, Albany, NY 12227. The burden of showing that such notice was actually received is on the purchaser. The fact that the notice was actually mailed or delivered to a post office is not sufficient to overcome the burden, nor may the purchaser rely on the presumption of regularity of the mail service.

(c) Timeliness.

(1) If by personal service, such service must be made at least 10 days prior to the taking of possession of or payment for such sale, transfer or assignment, whichever comes first.

Example 1:A person purchasing business assets in bulk will take possession of the assets and pay for the same on April 30, 1982. On April 20, 1982 he serves the notice of sale by having such notice hand-delivered to an employee of the Department of Taxation and Finance who has been authorized by the department to accept such service. Since the notice was personally served 10 days before the taking of possession and making payment, the notice is timely.

(2) If mailed by United States registered mail or United States certified mail--return receipt requested, with a sender's receipt postmarked by an employee of the United States Postal Service, the notice must be mailed at least 10 days prior to the taking of such possession or payment, whichever comes first.

Example 2:A person purchasing business assets in bulk will take possession of the assets and pay for the same on April 30, 1982. He mails the notice of sale by certified mail--return receipt requested, the sender's receipt for which is postmarked on April 15, 1982. Because of delay in the mails, such notice is not received by the Bulk Sales Unit, Central Office Audit Bureau, Audit Division, until April 23, 1982. Since the notice is mailed by certified mail--return receipt requested, and the sender's receipt is postmarked by an employee of the United States Postal Service, the date of mailing and not the date of receipt governs. Accordingly, the notice is timely.

(3) If mailed by ordinary mail, certified mail--return receipt requested, without a postmarked sender's receipt, or certified mail with no return receipt requested, the notice must actually be received by the Bulk Sales Unit, Central Office Audit Bureau, Audit Division, Department of Taxation and Finance, State Campus, Albany, NY 12227 at least 10 days prior to the taking of possession or payment, whichever comes first.

Example 3:Assume the facts in example 2, except that a return receipt is not requested or that the sender's receipt is not postmarked by an employee of the United States Postal Service. Therefore, the date of receipt governs the timeliness of the mailing. Since the notice is not received within 10 days before the taking of possession and making payment, the notice is untimely.

(4) The payment by the prospective purchaser to the seller of an amount which is nominal in relation to the selling price in order to bind the transaction is not deemed party payment for the purposes of this subdivision. However, if payment is made pursuant to a legally binding contract, such deposit constitutes part payment.

Example 4:A business places an advertisement in the newspaper offering the sale of its business assets at an asking price of $250,000. In response to the advertisement a prospective purchaser signs a binder with the seller's agent and deposits $250 with the agent to bind the transaction. The details, including the exact items to be sold, are to be set forth in a contract to be subsequently entered into between the parties. The deposit of $250 does not constitute part payment for the sale.

(5) When the 10th day prescribed falls on a Saturday, Sunday or day which is a legal holiday in the State of New York, the notice will be considered timely if it is given on the next succeeding day which is not a Saturday, Sunday or legal holiday.

Example 5:A person purchasing business assets in bulk will take possession of the assets on February 23, 1982. The 10th day before that date, February 13th, falls on Saturday. The next day is Sunday, and the next day is a legal holiday in New York State (Washington's birthday). The purchaser mails the notice by registered mail on Tuesday, February 16, 1982. The notice is timely.

Example 6:Assume the same facts in example 5, except that the purchaser makes personal service on Tuesday, February 16, 1982. The notice is timely.

Example 7:Assume the facts in example 5, except that the purchaser mails the notice by ordinary mail and the notice is actually received on Tuesday, February 16, 1982. The notice is timely.

(6) Every notice received more than 10 days prior to either the scheduled date of sale required to be set forth in the notice pursuant to subparagraph (d)(1)(iv) of this section, or the actual date of sale shall be deemed to have been received on the 10th day prior to the later of:

(i) such scheduled date of sale; or

(ii) the actual date of sale (i.e., the earlier of the date of taking possession of or the date of payment for the business assets).

Example 8:The purchaser of a business files a notice of sale with the department on February 9, 1990 which indicates the scheduled date of sale as June 18, 1990. The notice of sale, although received by the department on February 9, 1990 is deemed to have been received on June 8, 1990, 10 days prior to the date of sale indicated by the purchaser in the notice of sale.

(d) Contents.

(1) Such notice is required to set forth:

(i) the names and mailing addresses of the purchaser, seller and escrow agent, if any;

(ii) the purchaser's certificate of authority identification number, if any, name and each business location;

(iii) the seller's certificate of authority identification number, name, trade or business, trade or business name and each business location (whether or not all such locations are the subject of the bulk sale);

(iv) the scheduled date of sale;

(v) the total sales price of business or property;

(vi) the breakdown of the total sales price into the sales price paid for ( a) goodwill, (b) accounts receivable, (c) notes receivable, (d) mortgages, (e) securities, ( f) furniture and fixtures, (g) motor vehicles, ( h) manufacturing equipment, (i) other equipment, ( j) inventory, and (k) real property. If the sales price is indivisible and not applicable to any of the items, the total fair market value of the items in each category should be set forth;

(vii) the amount of escrow funds;

(viii) the location and type of business or property transferred; and

(ix) the terms and conditions of the sale, such as method of payment, schedule of payment or inventory of items.

(2) A preprinted notice of sale, transfer or assignment in bulk of business assets is available upon request from the Taxpayer Assistance Bureau, Department of Taxation and Finance, State Campus, Albany, NY 12227, or from the Taxpayer Assistance Bureau at any district office of the Department of Taxation and Finance.

(e) Revised notices.

(1) A purchaser who has previously filed a notice of sale with the Department of Taxation and Finance must file a revised notice with the department if any of the information which was required to be included in the original notice, in accordance with subdivision (d) of this section, changes, was incorrect or was not available at the time the original notice was filed.

(2) Every revised notice of sale filed with the department is subject to all the rules set forth in this section as to service, timeliness and contents.

(3) Where any item of information required to be contained in a revised notice of sale differs from the information contained in a prior notice of sale, the information contained in the revised notice will prevail. Where an item of information required to be contained in a revised notice is omitted but was included in a prior notice, the information will be considered to be unchanged. The date of receipt or, if applicable, the deemed date of receipt, of the revised notice will determine the dates by which the department must fulfill its obligations under subdivisions (a) and (c) of section 537.6 of this Part.

Example 9:Assume the same facts as in Example 8 of this section, except that on April 4, 1990 the purchaser files a revised notice of sale with the department stating that the sale will now take place on May 11, 1990. The department will now deem the date of receipt of the notice to be May 1, 1990, the tenth day prior to the new scheduled date of sale.

Example 10:Assume the same facts as in Example 8 of this section except that on April 4, 1990 the purchaser files a revised notice of sale stating that the sale actually took place on March 12, 1990. The date of receipt of the revised notice, April 4, 1990, will be used by the department in determining the dates by which it must fulfill its obligations under subdivisions (a) and (c) of section 537.6 of this Part.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 537.2