Clearance Certificates and Successor Liability

  1. What is a clearance certificate?
  2. What is needed in a request to obtain a clearance certificate?
  3. You indicate the request must be made in writing. Can this information be submitted over the telephone?
  4. Why do you need the date of sale?
  5. How long will it take to receive the clearance certificate once the request has been submitted?
  6. What is meant by successor liability?
  7. If I am taking over a business and there is no purchase price, am I still subject to successor liability?
  8. If I am responsible for successor liability, what do I have to pay?
  9. The seller of a business has several locations. I have purchased only one location. Am I responsible for what is owed at all locations?
  10. Am I still responsible for successor liability if the seller and I write up a contract that says that the seller will pay all liabilities?
  11. Will I receive a clearance certificate once all sales and use tax returns are filed and sales and use tax is paid?
  12. Who will receive a copy of the clearance certificate when it is issued?
  13. I haven't sold my business but I would like a certificate stating that all of my state taxes are paid. Can I still get a clearance certificate?

  1. What is a clearance certificate?

    A clearance certificate is requested by the purchaser of a business or their representative to ensure that the seller has filed all sales and use tax returns and paid all sales and use taxes due. The clearance certificate protects the purchaser from incurring successor liability.

  2. What is needed in a request to obtain a clearance certificate?

    Requests for a clearance certificate must include the following:

    • Legal name of seller
    • Business name of the seller
    • Tax Account number if known
    • Seller's current mailing address
    • Name of the purchaser
    • Purchaser's Tax Account number
    • Purchaser's mailing address
    • Date of sale
    • Sale price

    Requests for clearance certificates may be mailed, emailed, or faxed by the purchaser. The mailing address is as follows:

    Wisconsin Department of Revenue
    Clearance Certificates
    Mail Stop 4-SPU
    PO Box 8901
    Madison, WI 53708-8901
    Email: DORDelinquentTaxIS&ECompl@revenue.wi.gov
    FAX: (608) 267-1037

    The request must be made AFTER the sale has taken place.

  3. You indicate the request must be made in writing. Can this information be submitted over the telephone?

    No. Wisconsin Administrative Code section Tax 11.91(3)(b) states that the request must be submitted in writing.

  4. Why do you need the date of sale?

    We need the date of sale in order to determine when the seller's filing responsibility ends and the purchaser's filing responsibility begins.

  5. How long will it take to receive the clearance certificate once the request has been submitted?

    The Wisconsin Department of Revenue (DOR) must act on the request by either issuing the clearance certificate or issuing a notice of potential successor liability within 90 days of receiving the completed request for the clearance certificate. If the DOR does not respond within 90 days, the purchaser is relieved from any liability.

  6. What is meant by successor liability?

    The purchaser of a business or a stock of goods, including furniture, fixtures, equipment, inventory, leases, licenses, and good will, of any retailer liable for sales or use tax shall be personally liable for the payment of the seller's sales or use tax if the purchaser fails to withhold a sufficient amount of the purchase price to cover the taxes due.

  7. If I am taking over a business and there is no purchase price, am I still subject to successor liability?

    No, if there is no purchase price, there is no successor liability. If, however, the purchaser assumes debt in place of money exchanging hands, successor liability may still be assessed.

  8. If I am responsible for successor liability, what do I have to pay?

    A successor will be responsible for the amount of the sales and use tax liability, but not for penalties and interest. Although based on the predecessor's tax, the successor's liability shall not bear interest.

  9. The seller of a business has several locations. I have purchased only one location. Am I responsible for what is owed at all locations?

    No, a successor's liability is limited to amounts owed by the predecessor which were incurred at the location purchased. If the seller operated at more than one location while incurring a total liability for all locations, its liability incurred at the location sold will be determined and will be the amount for which the successor may be held liable.

  10. Am I still responsible for successor liability if the seller and I write up a contract that says that the seller will pay all liabilities?

    Yes. Successor liability is determined by law and shall not be altered by agreements and contracts between a buyer and seller.

  11. Will I receive a clearance certificate once all sales and use tax returns are filed and sales and use tax is paid?

    Yes, if one has been requested.

  12. Who will receive a copy of the clearance certificate when it is issued?

    The purchaser and the seller will receive a clearance certificate. In addition, the representatives of the purchaser may receive a copy if they submit a Power of Attorney form along with the initial request for the clearance certificate.

  13. I haven't sold my business but I would like a certificate stating that all of my state taxes are paid. Can I still get a clearance certificate?

    No, a clearance certificate would not be appropriate if no sale has taken place. However, you can request, in writing, a certificate relating to delinquent taxes. A letter requesting this certificate must be signed by the owner, corporate officer or a person with a power of attorney. The letter can be faxed to (608) 267-1037 or mailed to:

    Wisconsin Department of Revenue
    Certificate Relating to Delinquent Taxes
    Mail Stop 4-SPU
    PO Box 8901
    Madison, WI 53708-8901

    Please provide the Federal Employer Identification Number (FEIN) for the individual, partnership, or corporation requesting the certificate.

FOR MORE INFORMATION PLEASE CONTACT:

WISCONSIN DEPARTMENT OF REVENUE
Successor Liability Assistance
Mail Stop 4-SPU
PO Box 8901
Madison, WI 53708-8901
Phone: (608) 266-2604
Fax: (608) 267-1037
Email: DORDelinquentTaxIS&ECompl@revenue.wi.gov

December 23, 2013