2018 Tennessee Code
Title 67 - Taxes and Licenses
Chapter 4 - Privilege and Excise Taxes
Part 7 - Business Tax Act
§ 67-4-721. Settlement upon selling or quitting business.
(a) If any person liable for tax, interest or penalty levied under this part sells out the person's business or stock of goods, or quits the business, the person shall make a final return and payment within fifteen (15) days after the date of selling or quitting the business.
(b) The person's successor, successors or assigns, if any, shall withhold sufficient of the purchase money to cover the amount of the taxes, interest, and penalties due and unpaid until the former owner produces a receipt from the commissioner showing that they have been paid or a certificate stating that no taxes, interest or penalties are due.
(c)
(1) If the purchaser of a business or stock of goods fails to withhold the purchase money as provided in subsection (b), the 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 the 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 (c), 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) The purchaser shall have no liability for the taxes, interest or penalties, if the department releases the former owner, owners or assigns from the original liability for the taxes, interest or penalty through payment of the amount due and settlement with the department.
(d) A purchaser who, in good faith and without knowledge of any false statement in the affidavit, receives from the seller at the time of the purchase an affidavit stating under oath of the penalties of perjury the amount of the 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 the 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.
(e)
(1) Nothing in this section shall apply to any licensee transferring a business from one location to another, within the same municipality, on a one-time basis during any annual taxable period.
(2) In this event a licensee shall notify the county clerk, in the case of a business located in a county, or the appropriate city official, in the case of a business located in a municipality, at least five (5) days prior to the last day of business at the old location, submitting information for the new location and payment of the fee set out in § 8-21-701.
(3) Succeeding transfers by the same licensee, within the same annual taxable period, shall submit a final return and payment within fifteen (15) days to the commissioner. In addition, the licensee shall be required to obtain a new business license for the new location as set forth in § 67-4-723.
