By Leonard Holler, CPA, CVA, CGMA – Regional Director in Casper.
“I want to buy a business, but someone told me that I will have to pay sales tax on the purchase of the business. Is that right?” – Bruce in Wheatland.
Depending on the terms of the business sales transaction, it may be. If you are purchasing at least 80% of ALL of the assets of the business located in Wyoming and you continue to use the tangible personal property in the operation of the ongoing business in the state, it is excluded from the statutory definition of a “sale” subject to tax. Therefore, it would not be subject to sales or use tax. If the sale includes vehicles and you meet that 80% threshold, those vehicles would be exempt from sales tax when you go to license them at the county treasurer’ office.
However, sales tax would be charged on the sales price of the “tangible personal property” if the sale is for less than 80% of ALL assets of the existing business. By definition, if the sale is for less than 80% of ALL the assets, it would still exclude accounts receivable, inventory items for resale, goodwill (and other intangibles), and real estate, but could include furniture, fixtures, vehicles and equipment used in the business. You, as the purchaser or successor of the business, also retain the obligation to pay the tax until the former owner produces proof of the payment (certificate of no tax due) from the Department of Revenue of the sales tax owed.
The seller should file a return within 30 days after discontinuing or selling the business and you, as successor, should probably withhold enough money from the purchase price to pay the taxes until the proof of payment (certificate) is received indicating that there is no further taxes due.
For more questions about the terms of your sales transaction, you can call the Department of Revenue at (307)777-2459 or e-mail them at DOR_taxability@state.wy.us.