Business Buyers Beware: Bulk Sales Notice Requirements

The State of New Jersey Bulk Sales Law (N.J.S.A. 54:50-38) protects purchasers from tax debt from the seller of business assets when the sale is outside the normal course of business. Bulk sales include the sale of real property, tangible property such as inventory or materials and intangible assets like goodwill. However, this seemingly straight-forward statute presents many issues, including determining whether an entity is a business, whether something should be characterized as a business asset and what type/amount of tax may need to be collected. It is the purchaser’s responsibility to notify the State of a bulk sale. If you are a purchaser of a property that falls under the Bulk Sales law, it is important that you know what you need to do to protect yourself and your company, as set forth by the State:

When filing form C-9600, be aware of the following:

• The purchaser must give notice to the Division of Taxation about a pending sale/transfer/assignment of business assets sold/transferred/assigned other than in the ordinary course of business in order to protect them from inheriting seller’s taxes that may be due to the Division of Taxation;
  

• The buyer or their attorney must send a completed Form C-9600 with an executed copy of the contract of sale at least 10 business days prior to the sale/transfer/assignment of the business assets;
  

• If the business is unregistered or if there is missing or incomplete information there can be a delay in response time;
  

• All submissions must use overnight, certified, or registered mail and this will be the proof of delivery where (note: submissions received by the Division of Taxation after 11:59 a.m. are considered received the following business day);
  

• The Division will not respond to status inquiries until 10 business days after receipt (there is no expedited service available);
  

• All responses use the U.S. Postal Service, and allow ample time for mail delivery of the State response to your request (the State still does not email nor fax responses);
  

• Liquor license are subject to the License Verification unit and are not subject to the 10 business day time frame.

Again, it is the purchaser’s responsibility to notify the State of a bulk sale. We can assist you with same.