A. As used in Sections 7-1-61 through 7-1-63 NMSA 1978, "tax" means the amount of tax due, including penalties and interest, imposed by provisions of the taxes or tax acts set forth in Subsections A and B of Section 7-1-2 NMSA 1978, except the Income Tax Act.
B. The tangible and intangible property used in any business remains subject to liability for payment of the tax due on account of that business to the extent stated herein, even though the business changes hands.
C. If any person liable for any amount of tax from operating a business transfers that business to a successor, the successor shall place in a trust account sufficient money from the purchase price or other source to cover such amount of tax until the secretary or secretary's delegate issues a certificate stating that no amount is due, or the successor shall pay over the amount due to the department upon proper demand for, or assessment of, that amount due by the secretary.
History: 1953 Comp., § 72-13-74, enacted by Laws 1965, ch. 248, § 62; 1966, ch. 56, § 1; 1968, ch. 52, § 1; 1975, ch. 116, § 4; 1979, ch. 144, § 55; 1983, ch. 211, § 28; 1989, ch. 325, § 10; 1997, ch. 67, § 5; 2017, ch. 63, § 28.
ANNOTATIONSThe 2017 amendment, effective June 16, 2017, provided that penalties and interest are included in the meaning of "tax" for certain sections of the Tax Administration Act; in Subsection A, after "through", changed "7-1-64" to "7-1-63", and after "tax due", added "including penalties and interest".
The 1997 amendment, effective July 1, 1997, rewrote Subsections A and C.
The 1989 amendment, effective June 16, 1989, in Subsection A, substituted "or any municipal or county sales or gross receipts tax" for "the County Sales Tax Act, the Municipal Gross Receipts Tax Act or the Supplemental Municipal Gross Receipts Tax Act"; in Subsection C, substituted "the secretary" for "the director or his delegate" in two places and "department" for "division".
Question of fact whether business was sold or purchased. — Whether previous owner sold out its business and whether plaintiff purchased that business is a question of fact and, accordingly, this court examines the facts. In doing so, it views the evidence in the light most favorable to the commissioner's (secretary's) decision. Sterling Title Co. v. Comm'r of Revenue, 1973-NMCA-086, 85 N.M. 279, 511 P.2d 765.
Business need not be active for section to apply. — The business which changed hands need not be an active business for the provisions of this section to apply. Sterling Title Co. v. Comm'r of Revenue, 1973-NMCA-086, 85 N.M. 279, 511 P.2d 765.
Taking over assets of insolvent business meets requirement. — The taking over of assets of an insolvent or defunct business was sufficient to meet the statutory requirements. Sterling Title Co. v. Comm'r of Revenue, 1973-NMCA-086, 85 N.M. 279, 511 P.2d 765.
Duty is on the successor in business to cover tax liability. — This statute places the duty on the successor who acquires the business from the entity liable for the taxes to set aside from the purchase price, or other sources, sufficient funds to cover any remaining tax liability from the previous owner. The policy behind placing this duty on the successor is to secure collection of taxes by imposing derivative liability on purchasers of a business who are generally in a better financial position to collect or pay the tax from the sale price than the seller quitting the business. Hi-Country Buick GMC v. N.M. Taxation and Revenue Dep't., 2016-NMCA-027, cert. denied.
This section limits the tax that can be collected. — This section specifically deals with the narrow circumstances involving successor in business tax liability, and limits the tax that can be collected to the amount of tax imposed by the provisions of 7-1-2 NMSA 1978. Hi-Country Buick GMC v. N.M. Taxation and Revenue Dep't., 2016-NMCA-027, cert. denied.
Where the taxation and revenue department imposed a tax assessment on appellant, as a successor in business to a car dealership, including penalties and interest, after appellant acquired the car dealership from the prior owners who defaulted on a promissory note, and where appellant acquired inventory from the prior dealership, entered into a management agreement for the continued operation of the car dealership, and where certain liabilities of the prior dealership were paid, appellant, as a successor in business, was liable for unpaid withholding and gross receipts taxes, but was not liable for penalties and interest, because the provisions of 7-1-2 NMSA 1978 do not impose penalties or interest for withholding tax or gross receipts tax. Hi-Country Buick GMC v. N.M. Taxation and Revenue Dep't., 2016-NMCA-027, cert. denied.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation § 216.
Liability of purchaser of personal property for taxes assessed against former owner, 41 A.L.R. 187.
85 C.J.S. Taxation §§ 979 to 983.