Successor Liability – Nevada Sales and Use Tax

When buying a Nevada business, you as buyer become liable for any unpaid amounts due the Nevada Department of Taxation (NDT) per NRS 360.525.  In fact, under that statute you are required to withhold the amount due the NDT from the purchase price paid to seller.  Your failure to do so results in you being personally liable for those amounts.  Therefore, you’ll want to request the seller complete a Successor Liability form to be submitted to the Nevada Department of Taxation (NDT).  The purpose of the successor liability form is to get a “payoff amount” for any tax liability, just as you would with a car loan.  It enables a buyer and seller to work that amount into the escrow instructions or into the purchase agreement to ensure the buyer doesn’t end up on the hook for the seller’s unpaid taxes.  This form requests that the seller of the business authorize the NDT to release information regarding its account and requires a notarized seller signature.

We suggest you list yourself as buyer or your attorney as the point of contact, so the report is mailed directly to you.  Make this request as early in the transaction as possible, as NRS 360.525(3) allows the NDT 60-90 days to honor the request, and their results are usually sent via snail mail.

The NDT will choose the closest following month-end date to calculate any outstanding balance, assuming the transaction will close at the end of that period.