If you are buying a business in Wyoming, 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 a Wyoming business also should check state UCC records to make sure the business’s assets are not encumbered by any liens.
A tax clearance letter (also known in Wyoming as a certificate of no taxes due) provides confirmation that a business’s tax accounts are paid up with the state taxing authorities. Under Wyoming law, the seller of a business or that business’s stock of goods must file a final tax return and make a final payment of all taxes due within thirty days of the sale. The buyer must withhold from the purchase price an amount equal to any taxes, interest, or penalties due until the seller provides documentation from the Wyoming Department of Revenue (DOR) showing all taxes are paid or no taxes are due. For more details, check Section 39-16-107 of the Wyoming Statutes, accessible through a free privately-maintained website.
The DOR website does not provide forms to request tax certificates. For more information, contact the DOR’s Excise (Sales & Use) Tax Division at:
Wyoming Department of Revenue
122 West 25th Street, 2nd Floor West
Cheyenne, Wyoming 82002-0110
Telephone: (307) 777-5200
If you are buying a Wyoming 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 use Wyoming’s UCC E-system on the Wyoming Secretary of State website to find out what creditor financing statements are on record. However, you will first need to register by mailing in a completed Wyoming Secretary of State UCC Subscription Form and paying a fee. Wyoming’s search site also allows you to search for federal tax liens.
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.