CS/HB 907

1
A bill to be entitled
2An act relating to the transfer of tax liability; amending
3s. 213.758, F.S.; providing definitions; revising
4provisions relating to tax liability when a person
5transfers or quits a business; excluding the corporate
6income tax from provisions relating to the transfer of tax
7liabilities when a business is transferred; providing that
8the transfer of the assets of a business or stock of goods
9of a business under certain circumstances constitutes a
10transfer of the business; requiring the Department of
11Revenue to provide certain notification to a business
12before a circuit court may enjoin business activity by
13that business; providing that transferees of the business
14are liable for certain taxes unless specified conditions
15are met; requiring the department to conduct certain
16audits relating to the tax liability of transferors and
17transferees of a business within a specified time period;
18limiting a transferee who is liable for unpaid taxes from
19engaging in business activities under certain
20circumstances; providing an exception during the pendency
21of a timely filed appeal; providing for the posting of
22security during the pendency of an appeal under certain
23circumstances; requiring certain notification by the
24Department of Revenue to a transferee before a circuit
25court may enjoin business activity in an action brought by
26the Department of Legal Affairs seeking an injunction;
27specifying a transferor and transferee of the assets of a
28business are jointly and severally liable for certain tax
29payments up to a specified maximum amount; specifying the
30maximum liability of a transferee; providing methods for
31calculating the fair market value or total purchase price
32of specified business transfers to determine maximum tax
33liability of transferees; repealing s. 202.31, F.S.,
34relating to the tax liability and criminal liability of
35dealers of communications services who make certain
36transfers related to a communications services business;
37repealing s. 212.10, F.S., relating to a dealer's tax
38liability and criminal liability for sales tax when
39certain transfers of a business occur; providing an
40effective date.
41
42Be It Enacted by the Legislature of the State of Florida:
43
44     Section 1.  Section 213.758, Florida Statutes, is amended
45to read:
46     213.758  Transfer of tax liabilities.-
47     (1)  As used in this section, the term:
48     (a)  "Business" means any activity regularly engaged in by
49any person, or caused to be engaged in by any person, for the
50purpose of direct or indirect, private or public gain, benefit,
51or advantage. The term does not include occasional or isolated
52sales or transactions involving property or services by a person
53who does not hold himself or herself out as engaged in business.
54A discrete division or portion of a business is not a separate
55business and must be aggregated with all other divisions or
56portions that constitute a business if the division or portion
57is not a separate legal entity.
58     (b)  "Financial institution" means a financial institution
59as defined in s. 655.005 and any person who controls, is
60controlled by, or is under common control with a financial
61institution as defined in s. 655.005.
62     (c)  "Insider" means a person as defined in s. 726.102(7),
63and a member, manager, or managing member of a limited liability
64company.
65     (d)(a)  "Involuntary transfer" means a transfer of a
66business or stock of goods made without the consent of the
67transferor, including, but not limited to, a transfer:
68     1.  That occurs due to the foreclosure of a security
69interest issued to a person who is not an insider as defined in
70s. 726.102;
71     2.  That results from an eminent domain or condemnation
72action;
73     3.  Pursuant to chapter 61, chapter 702, or the United
74States Bankruptcy Code;
75     4.  To a financial institution, as defined in s. 655.005,
76if the transfer is made to satisfy the transferor's debt to the
77financial institution; or
78     5.  To a third party to the extent that the proceeds are
79used to satisfy the transferor's indebtedness to a financial
80institution as defined in s. 655.005. If the third party
81receives assets worth more than the indebtedness, the transfer
82of the excess may not be deemed an involuntary transfer.
83     (e)  "Stock of goods" means the inventory of a business
84held for sale to customers in the ordinary course of business.
85     (f)  "Tax" means any tax, interest, penalty, surcharge, or
86fee administered by the department pursuant to chapter 443 or
87any of the chapters specified in s. 213.05, excluding corporate
88income tax.
89     (g)(b)  "Transfer" means every mode, direct or indirect,
90with or without consideration, of disposing of or parting with a
91business, assets of the business, or stock of goods, and
92includes, but is not limited to, assigning, conveying, demising,
93gifting, granting, or selling, other than to customers in the
94ordinary course of business, to a transferee or to a group of
95transferees who are acting in concert. A business is transferred
96when there is a transfer of more than 50 percent of:
97     1.  The business;
98     2.  The assets of the business; or
99     3.  The stock of goods of the business.
100     (2)  A taxpayer in business who is liable for any tax
101arising from the operation of that business, interest, penalty,
102surcharge, or fee administered by the department pursuant to
103chapter 443 or described in s. 72.011(1), excluding corporate
104income tax, and who quits the a business without the benefit of
105a purchaser, successor, or assignee, or without transferring the
106business, assets of the business, or stock of goods to a
107transferee, must file a final return for the business and make
108full payment of all taxes arising from the operation of that
109business within 15 days after quitting the business. A taxpayer
110who fails to file a final return and make payment may not engage
111in any business in this state until the final return has been
112filed and all taxes, interest, or penalties due have been paid.
113The Department of Legal Affairs may seek an injunction at the
114request of the department to prevent further business activity
115of a taxpayer who fails to file a final return and make payment
116of the taxes associated with the operation of the business until
117such taxes tax, interest, or penalties are paid. A temporary
118injunction enjoining further business activity may be granted by
119a circuit court with jurisdiction over the taxpayer if the
120department has provided at least 20 days' prior written notice
121to the taxpayer without notice. The written notice may be
122provided to the taxpayer before the filing of the lawsuit
123seeking the injunction.
124     (3)  A taxpayer who is liable for taxes with respect to a
125business, interest, or penalties levied under chapter 443 or any
126of the chapters specified in s. 213.05, excluding corporate
127income tax, who transfers the taxpayer's business, assets of the
128business, or stock of goods, must file a final return and make
129full payment within 15 days after the date of transfer.
130     (4)(a)  A transferee, or a group of transferees acting in
131concert, of more than 50 percent of a business, assets of a
132business, or stock of goods is liable for any unpaid tax,
133interest, or penalties owed by the transferor arising from the
134operation of that business unless:
135     1.a.  The transferor provides a receipt or certificate of
136compliance from the department to the transferee showing that
137the transferor has not received a notice of audit and the
138transferor has filed all required tax returns and has paid all
139tax arising is not liable for taxes, interest, or penalties from
140the operation of the business identified on the returns filed;
141and
142     b.  There were no insiders in common between the transferor
143and the transferee at the time of the transfer; or and
144     2.  The department finds that the transferor is not liable
145for taxes, interest, or penalties after an audit of the
146transferor's books and records. The audit may be requested by
147the transferee or the transferor and, if not done pursuant to
148the certified audit program under s. 213.285, must be completed
149by the department within 90 days after the records are made
150available to the department. The department may charge a fee for
151the cost of the audit if it has not issued a notice of intent to
152audit by the time the request for the audit is received.
153     (b)  A transferee may withhold a portion of the
154consideration for a business, assets of the business, or stock
155of goods to pay the tax taxes, interest, or penalties owed to
156the state by the transferor taxpayer arising from the operation
157of the business. The transferee shall pay the withheld
158consideration to the state within 30 days after the date of the
159transfer. If the consideration withheld is less than the
160transferor's liability, the transferor remains liable for the
161deficiency.
162     (c)  A transferee who is liable for unpaid tax of a
163transferor and who fails to pay the taxes due within 60 days
164after written notice from the department may not engage in any
165business in the state until the taxes are paid unless an action
166is filed pursuant to subsection (7). If an action is timely
167filed, the transferee may continue to engage in business until a
168final determination is entered against the transferee, although
169the court may, during the pendency of the action, require the
170transferee to post a bond or other security if the department
171establishes that it is likely to prevail and the collection of
172the unpaid tax would be jeopardized by delay acquires the
173business or stock of goods and fails to pay the taxes, interest,
174or penalties due may not engage in any business in the state
175until the taxes, interest, or penalties are paid. The Department
176of Legal Affairs may seek an injunction at the request of the
177department to prevent further business activity of a transferee
178who is liable for unpaid tax of a transferor and who fails to
179pay or cause to be paid the transferee's maximum liability for
180such tax due until such maximum liability for the tax is,
181interest, or penalties are paid. A temporary injunction
182enjoining further business activity may be granted by a circuit
183court if the department has provided at least 20 days' prior
184written notice to the taxpayer without notice. The written
185notice may be provided to the taxpayer before the filing of the
186lawsuit seeking the injunction.
187     (5)  The transferee, or transferees acting in concert, of
188more than 50 percent of a business, assets of the business, or
189stock of goods who are liable for any tax pursuant to this
190section shall be are jointly and severally liable with the
191transferor for the payment of the tax taxes, interest, or
192penalties owed to the state from the operation of the business
193by the transferor up to the transferee's maximum liability for
194such tax due.
195     (6)  The maximum liability of a transferee pursuant to this
196section is equal to the fair market value of the business,
197assets of the business, or stock of goods property transferred
198to the transferee or the total purchase price paid by the
199transferee for the business, assets of the business, or stock of
200goods, whichever is greater.
201     (a)  The fair market value must be determined net of any
202liens or liabilities, with the exception of liens or liabilities
203owed to insiders.
204     (b)  The total purchase price must be determined net of
205liens and liabilities against the assets, with the exception of:
206     1.  Liens or liabilities owed to insiders.
207     2.  Liens or liabilities assumed by the transferee that are
208not liens or liabilities owed to insiders.
209     (7)  After notice by the department of transferee liability
210under this section, the transferee has 60 days within which to
211file an action as provided in chapter 72.
212     (8)  This section does not impose liability on a transferee
213of a business or stock of goods pursuant to an involuntary
214transfer.
215     (9)  The department may adopt rules necessary to administer
216and enforce this section.
217     Section 2.  Sections 202.31 and 212.10, Florida Statutes,
218are repealed.
219     Section 3.  This act shall take effect July 1, 2011.


CODING: Words stricken are deletions; words underlined are additions.