Trouble "in bulk" can befall unwary asset purchasers in New York

Purchasers of corporate businesses are subject to the risk of exposure to contingent and undisclosed liabilities of the seller. Purchasers often insist on acquiring the assets of a business as a means of minimizing these risks. One exposure that is sometimes overlooked or underestimated is liability for outstanding New York State sales taxes of the seller. Section 1141(c) of the New York State Tax Law and regulations issued thereunder impose a detailed set of procedures on purchasers, transferees, or assignees of business assets in bulk. Noncompliance with the bulk sale rules can easily double the cost of an acquisition. The specific rules are discussed.