Texas Sales Tax
Frequently Asked Questions
Buying, Selling or Discontinuing a Business
- Do I need to contact the Comptroller if I am buying a business or part of a business?
- What should I do if the previous owner has unpaid taxes?
- Do I need to apply for a new sales and use tax permit if I buy another business?
- Do I need to tell the Comptroller I am closing or selling my business?
- 1. Do I need to contact the Comptroller if I am buying a business or part of a business?
- Yes. If you buy an existing business, the inventory of an existing business or the name and good will of an existing business, you can be liable for the sales tax owed by the business unless you get a Certificate of No Tax Due for the business from the Comptroller before your purchase. If you don't get this clearance before you buy the business, and if taxes are owed and the previous owner has failed to pay those taxes, you could be required to pay any taxes, interest and penalties that are due.
To protect yourself from having to pay any sales and use tax owed by the business you are buying, you should submit a written request for a “Certificate of No Tax Due” to:
Certificate of No Tax Due
Audit Division Headquarters
Texas Comptroller of Public Accounts
P.O. Box 13528
Austin, TX 78711-3528
Send your request by fax or email:
The written request must include the seller’s 11-digit taxpayer number; name of business being sold; contact information for requester (including name, telephone number, fax number and address); and name of purchaser. There is no charge for the certificate. If you have any questions about the certificate, call 1-800-344-7916. In most cases, a certificate can be issued within seven to 10 business days, but it could take four to six weeks if we need to audit the seller to verify that no tax is due.
Either the buyer or the seller can request the certificate. Because of state laws protecting the confidentiality of tax information, the Comptroller’s office is limited in what we can tell the buyer without written permission from the seller. All account information we send to the buyer will also be sent to the seller. For example, if the buyer requests the certificate, we will also send a copy to the seller. If for any reason we cannot issue the certificate, we can only tell the buyer to contact the seller to clear the account.
If you are buying a business through an escrow company, you should ensure that the company requests the certificate of clearance on your behalf. It is important to remember that if the current owner owes taxes and escrow closes without a certificate of tax clearance, you may be held liable for unpaid taxes (for the amount up to the purchase price for the business, which includes any assumption of indebtedness).
- 2. What should I do if the previous owner has unpaid taxes?
- If the Comptroller's office does not issue the Certificate of No Tax Due, you are required to withhold enough of the purchase price of the business to cover any amount owed to the Comptroller until the previous owner produces:
- A receipt from the Comptroller showing all the liability has been paid, or
- A certificate from the Comptroller stating that no amount is due.
If a Certificate of No Tax Due has been issued for the business, you are no longer legally required to set aside funds to cover unpaid sales and use taxes.
- 3. Do I need to apply for a new sales and use tax permit if I buy another business?
- Yes. You need a new permit for the business.
- 4. Do I need to tell the Comptroller I am closing or selling my business?
- Yes. You can make changes to your account by entering the information on the Close Business Location Web page, or contact us using Texas Tax Help.