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Successors liable for unpaid business tax in Michigan

TORONTO, Ont. -- Failure to escrow money when purchasing a Michigan business makes you liable for the Single Busine...


TORONTO, Ont. — Failure to escrow money when purchasing a Michigan business makes you liable for the Single Business Tax if it’s not paid.

According to the OTA, an individual who recently purchased an ongoing business was liable for the tax due from the prior owner because the buyer failed to escrow money at the time of purchase to cover any taxes, interest and penalties that may have been due and unpaid.

At the time of purchase, the taxpayer examined the estimated payments of the prior owner, determined that the tax was currently paid, and did not place any money in escrow. The prior owner subsequently filed a tax return showing an SBT balance due, but failed to submit payment.

The state tax department assessed the delinquent SBT against the successor business.

A statute requires the purchaser of a business to hold money in escrow for taxes as may be due and unpaid until the seller produces either a receipt from the Revenue Commissioner showing that the taxes due are paid or a certificate stating that taxes are not due. Any taxpayer failing to meet this requirement is liable for the unpaid taxes of the former owner.

Carriers are reminded that OTA, in conjunction with the Canadian Trucking Alliance, got a bill passed in 2000 to reduce the SBT of member carriers by 70% (see press release Canadian Truckers Reach Agreement with Michigan on Single Business Tax dated October 5, 2000 on CTA’s Web site at www.cantruck.com). The bill reduced the look back period of unpaid SBT to 2000.


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