67-6-513 - Settlement on quitting business. - Tennessee Statutes

67-6-513. Settlement on quitting business.

(a)  If any dealer liable for any tax, interest or penalty levied hereunder shall sell out such dealer's business or stock of goods, or shall quit the business, the dealer shall make a final return and payment within fifteen (15) days after the date of selling or quitting the business.

(b)  (1)  The dealer's successor, successors, or assigns, if any, shall withhold sufficient amounts of the purchase money to cover the amount of such taxes, interest and penalties due and unpaid until the former owner shall produce a receipt from the commissioner showing that they have been paid, or a certificate stating that no taxes, interest, or penalties are due. If the purchaser of a business or stock of goods fails to withhold the purchase money as above provided, such purchaser shall be personally liable for the payment of the taxes, interest and penalties accruing and unpaid on account of the operation of the business by any former owner, owners or assigns.

     (2)  The amount of the purchaser's liability for payment of such taxes, interest and penalties shall not exceed the amount of the purchase money paid by the purchaser to the seller in good faith and for full and adequate consideration in money or money's worth. “Purchase money,” as used in this subsection (b), includes cash paid, purchase money notes given by purchaser to seller, the cancellation of the seller's indebtedness to the purchaser, the fair market value of property or other consideration given by purchaser to seller; and does not include indebtedness of the seller either taken or assumed by the purchaser when a tax lien has not been filed.

     (3)  Such purchaser shall have no liability for such taxes, interest or penalties, if the department releases the former owner, owners or assigns from the original liability for such taxes, interest or penalty through payment of the amount due, and settlement with the department.

(c)  A purchaser who, in good faith and without knowledge of any false statement therein, receives from the seller at the time of the purchase an affidavit stating under oath or the penalties of perjury the amount of such taxes, interest and penalty due and unpaid by the seller to the department through the date of the purchase, or a statement that there are no due and unpaid taxes, interest and penalty, who in good faith withholds and sets aside from the purchase money to be paid to the seller an amount sufficient to pay the amount of such taxes, interest and penalty shown to be due and unpaid in the seller's affidavit, and who tenders a copy of the seller's affidavit by registered or certified mail or by personal service to the tax enforcement division of the department, shall be entitled to a release from the commissioner from any liability, in excess of that shown on the affidavit, for the payment of the taxes, interest, and penalty accrued and unpaid on account of the operation of the business by any former owner or assigns, unless the commissioner notifies the purchaser of the correct tax liability at the return address provided by the purchaser within fifteen (15) days of receipt of the affidavit.

[Acts 1947, ch. 3, § 7; C. Supp. 1950, § 1248.63 (Williams, § 1328.29); T.C.A. (orig. ed.), § 67-3025; Acts 1986, ch. 598, § 13; 1992, ch. 942, § 1.]