What is considered to be a binding agreement for tax purposes?

I sold my business in November. In the contract of sale, it states that the buyer will be responsible for all taxes comencing April 19th. That is because they took complete controll of the business on that date. Will this statement in the contract be viewed as binding by the IRS?

Asked on February 1, 2013 under Business Law, Colorado

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Whether or not the Internal Revenue Service agrees that the new owner of the business will be responsible for future taxes post April 19, 2013 remains to be seen. However the provision in the agreement helps your position on the issue.

I suggest that if the entity is a corporation or a limited liability company that you notify your secretary of state's office as to the change in ownership in writing and request that its records reflect such. Send a copy of the letter to the Internal Revenue Service as well.

Finally, you should consult with a business attorney before you sign the final paperwork concerning the subject transaction.


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