Section 63 Transferee Liability at Law

• Library: Tax Law 2009

In most cases, the assessed party will be the vendor. Less frequently it will be the purchaser, such as when the purchaser has issued an improper exemption certificate or otherwise (e.g., consumer’s use tax) remains primarily liable for the tax. But it may be some time before MoDOR’s original deficiency becomes a final assessment, due principally to available administrative and judicial appeals. In the interim, the primary taxpayer’s circumstances may have radically changed. Even if the taxpayer concedes liability or the liability is expeditiously determined administratively or judicially, the primary taxpayer may already be financially distressed, out of business, out of state, or otherwise elusive. Thus, MoDOR’s assessment may not be collectible even after all this effort.

Nonpayment does not necessarily return MoDOR to “square one” in its collection efforts, although in many instances this would be the case. MoDOR cannot readily assert primary liability against someone else later in light of its prior assessment, but see State ex rel. and to Use of Rudder v. Haphe, 31 S.W.2d 788 (Mo. 1930) (property tax case), although asserting full liability against each taxpayer in a series of consolidated cases may be successful. See, e.g., Rest. Assocs., Inc. v. Dir. of Revenue, Nos. RZ-84-0832 (1986 WL 23208 (July 11, 1986)); RZ-84-1624 (1986 WL 23207 (July 31, 1986)); RZ-84-2759 (1986 WL 23193 (July 31, 1986)) (Mo. Admin. Hearing Comm’n). What may then result is a search for someone else to pay the tax. At the conclusion of this search, former or current owners, officers, directors, partners, employees, etc. of a delinquent taxpayer or its assets (or the persons holding these positions for a company that obtained its assets from a delinquent taxpayer) may be assessed by MoDOR. Because these situations are few and far between, they merit review in detail because of the unexpected and perhaps substantial burden they impose on a perhaps unsuspecting taxpayer.

As noted in §11.62 above, § 144.155, RSMo 2000, extends the liability at law or in equity of any “transferee” for any assessment of tax, addition to tax, penalty, or interest due under the Sales Tax Law, §§ 144.010–144.525, RSMo 2000 and Supp. 2007, and the Compensating Use Tax Law, §§ 144.600–144.761, RSMo 2000 and Supp. 2007. As a procedural statute, § 144.155 becomes operative only after a substantive determination that a person is a “transferee” at law or in equity from the primary taxpayer. This...