If you are buying a business in Oklahoma, you will want to obtain tax clearance from the state to make sure you are not taking on the seller’s outstanding tax liability. Buyers often assume that if they acquire a business through an asset purchase as opposed to a stock sale then they will not be responsible for any of the seller’s unpaid taxes. However, most states have successor liability rules that allow the transfer of certain tax liability to the buyer even in an asset purchase. Often this type of successor liability is limited to sales and use tax and other excise taxes that a seller collects on behalf of the state.
Obtaining a tax clearance letter from the state is important assurance for a buyer in an asset or a stock purchase that they are not taking on unpaid tax liabilities of the seller. In addition to obtaining tax clearance from the state, a buyer of an Oklahoma business also should check state UCC records to make sure the business’s assets are not encumbered by any liens.
Unlike most other states, Oklahoma does not have an online form to request, or online information about how to obtain, a document showing that a business has no unpaid state taxes. This type of document, which some Oklahoma state tax officials call a letter of good standing, can be obtained by contacting the Oklahoma Tax Commission (OTC) and asking to be connected with the Business Tax Department. You will need a federal Tax ID number to identify the business. For additional information, call the OTC Taxpayer Service Center at 405-521-3160.
If you are buying an Oklahoma business, you’ll also want to make sure the assets you are acquiring are not subject to any liens. You can do this by checking the state’s public records for creditor financing statements. This gives you notice of what secured debt you’ll be acquiring (if any) related to the business’s equipment, inventory, and possibly other items. You will want to do this whether you are buying the business in an asset or stock purchase.
You can do a UCC search on the ROAM website. A UCC search on the ROAM website also provides information about tax liens.
The ROAM website also has an option to do a separate search for liens on real estate (such as mortgages). For this type of search, choose ROD search rather than UCC search on the ROAM homepage.
If you are buying a business, there are other possible kinds of business debt not covered here that you might want to investigate, particularly in a stock acquisition. This could include, for example, unpaid local taxes, guarantees, or other private contractual obligations.
For all the essential information about buying or selling a business, get The Complete Guide to Buying a Business (Nolo) and The Complete Guide to Selling a Business (Nolo), both by Fred S. Steingold.