A. If, after any business is transferred to a successor, any tax from operating the business for which the former owner is liable remains due, the successor shall pay the amount due within thirty days. If the successor fails to pay within thirty days of the date notice provided for in Section 7-1-62 NMSA 1978 was mailed or if a certificate was not requested, the department shall assess the successor the amount due.
B. Upon the payment of the amount due from the amount placed in a trust account as provided by Subsection C of Section 7-1-61 NMSA 1978, the balance, if any, remaining may be released to the former owner or otherwise lawfully disposed of. The former owner shall be credited with the payment of tax.
C. A successor may discharge an assessment made pursuant to this section by paying to the department the full value of the transferred tangible and intangible property. The successor shall remain liable for the amount assessed, however, until the amount is paid if:
(1) the business has been transferred to evade or defeat any tax;
(2) the transfer of the business amounts to a de facto merger, consolidation or mere continuation of the transferor's business; or
(3) the successor has assumed the liability.
History: 1953 Comp., § 72-13-76, enacted by Laws 1965, ch. 248, § 64; 1979, ch. 144, § 57; 1997, ch. 67, § 7.
ANNOTATIONSThe 1997 amendment, effective July 1, 1997, substituted "assessment of tax due" for "demand for payment" in the section heading; rewrote Subsection A; substituted "due from the amount placed in a trust account" for "required to be withheld" and made a stylistic change in Subsection B; and added Subsection C.
"Successor" defined. — A successor means any transferee of a business or property of a business, except to the extent it would be materially inconsistent with the rights of secured creditors that have perfected security interests or other perfected liens on the business or property of the business. Implicit in the taxation and revenue department's definition of "successor" is the notion that the future intent of a transferee of a business, once it has received the business, is an important aspect of determining whether it is a "successor". A successor may include a business that is acquired and run for an indefinite period by a creditor of the predecessor, but does not include one who acquires and operates a business for a limited period of time in order to protect its collateral. The distinguishing feature is whether the entity acquiring the business intends to retain and operate the business. 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, there was a presumption that appellant was a successor in business and appellant failed to rebut this presumption. Hi-Country Buick GMC v. N.M. Taxation and Revenue Dep't., 2016-NMCA-027, cert. denied.