Section 66 Concept of a Statutory ?Successor?

• Library: Tax Law 2009

“To be a successor one must be a purchaser of the business property in question.” Bates v. Dir. of Revenue, 691 S.W.2d 273, 276 (Mo. banc 1985). A purchaser of an insubstantial portion of the vendor’s business or inventory is not a successor. “The intent of the statute is that the purported successor purchase all or substantially all of the business or stock of goods from the party who is liable for the tax, or from a successor thereto.” Air Mgmt. Supply, Inc. v. Dir. of Revenue, No. 97-000771 RV, 1998 WL 219792 (Mo. Admin. Hearing Comm’n, Apr. 23, 1998) (purchaser did not purchase sufficient assets to come within § 144.150, now RSMo 2000). But see Surrey’s on the Plaza, Inc. v. Dir. of Revenue, 128 S.W.3d 508 (Mo. banc 2004) (substantially all of the business of one of a corporation’s several businesses was sold, thereby activating § 144.150). Accordingly, a purchaser should investigate whether taxes, interest, etc. are due and unpaid by not just the vendor, but also any other former owner or predecessor, whether immediate or not, when acquiring all or substantially all of a vendor’s business assets (e.g., real estate, equipment, fixtures) or inventory. Bates, 691 S.W.2d 273 (each location is normally a distinct business for purposes of successorship liability).

One way MoDOR can gather information about “successorship” transactions is through Form DOR-126, Registration Change Request, in which a taxpayer discloses changes in ownership, newly opened or closed locations, etc. that may have arisen from a purchase transaction. Form DOR-126 is available at:

http://dor.mo.gov/tax/business/register/forms/126f.pdf

A like inquiry is elicited from Form DOR-2643, Missouri Tax Registration Application, submitted by an applicant with respect to asset purchases from a person formerly conducting a business (e.g., Item 3, Reason for Applying). Form DOR-2643 is available at:

http://dor.mo.gov/tax/business/register/forms/2643f.pdf

As just indicated, successorship is not just confined to the immediate owner (the vendor). While the vendor is the immediate owner of business assets and inventory, the concept of a successor extends beyond the vendor to include all former owners or predecessors...