Legal Question in Business Law in California

Re: Lien on business I am interested in purchasing

Yes, the IRS will have a lien on the business assets. When they get ahold of her, she'll tell them she sold the business to you. Then, all of those assets will be subject to the lien. See if you can pay the lien off for small amount before buying the business. Good luck and thanks for inquiring.

Re: Lien on business I am interested in purchasing

You run a big risk in playing hide the ball with the IRS. There are ways to not be responsible for liabilities, but this one tends to stick with the company. Maybe able to make deal with IRS and pay company's tax debt off, then have busisness free and clear. Lots of possibilities if you want the busisness that bad. Good luck, Paul

Re: Lien on business I am interested in purchasing

Tho owners transfer of the business to his daughter is what the IRS calls a "Sham" transaction in an attempt to avoid taxes. The IRS is not bound by the sale.

Whatever the lien amount is, you should deduct that what you would give her for the business, with the remainder going to the IRS. The other option is for her (or her father) to do an offer in compromise with the IRS if the value of the tax liens exceeds the value of the business and/or his other assets.

Finally, you will want a full release from the IRS of any lien against the business for past taxes.

Re: Lien on business I am interested in purchasing

Finally, both the father and the daughter should indemnify you against any and all undisclosed liens of whatever nature from whatever source. If the Feds have a tax lien, a State tax lien may be lurking in the shadows, not to mention claims from employees, suppliers, other creditors, etc.

You can run a search with the Secretary of State for UCC-1 financing statements filed against the business and the two individuals. See an attorney or study the instructions on the S/S Web site at www.ss.ca.gov (look at UCC under the Business Portal).

Re: Lien on business I am interested in purchasing

Thank you for your posting.

In my opinion, the only way to own this business free and clear, since taxes are a "priority debt", typically paid first, and there is a lien on business assets, is to involve the IRS in the transaction. With an IRS release, which should be drafted to release liability for future taxes as well, you would be protected from future liability.

I hope that this answer helps, but if you have further questions, want more information, or feel that you need legal representation, please email me directly anytime at [email protected]. I am happy to help in any way that I can.