In the sale of a business or stock of goods, the buyer must hold back enough of the selling price to cover any outstanding tax liability.

The successor’s liability extends to taxes incurred with reference to the operation of the business by the owner or any former owner.

The purchaser of the business or stock of goods will be released from further obligation to withhold funds from the purchase price if he or she obtains a certificate from the Board of Equalization stating that no taxes, interest, or penalties are due from the seller or any previous owner.

The liability is enforced by service of a notice of successor liability. The successor may petition the Board of Equalization for reconsideration of the liability.

Successor liability is always greater for the buyer when a business sale is a stock sale.

Employee vs. Independent Contractor