Did inheriting a Texas business create successor liability for the deceased owner's state sales tax?

Plain-English summary

The Texas Comptroller's attorney said an individual inheriting a business would not be subject to successor liability for the deceased owner's state sales tax when both conditions were met:

• no purchase price was paid to the deceased person's estate; and
• the heir did not assume the estate's debts or liabilities as a condition of receiving the inheritance.

The letter cited Tex. Tax Code § 151.613. It also cautioned that the statement was based only on the problem as presented and was not a factual determination concerning the requester's client.

What this means for you

Heirs receiving a business

The conclusion depended on the transfer being an inheritance without a purchase price and without conditional assumption of estate liabilities.

Estates and business advisers

Payment to the estate or an agreement requiring the heir to assume debts could take the facts outside the letter's conclusion.

Accountants and tax professionals

Confirm the transfer documents and liability terms. The Comptroller expressly did not determine the client's actual facts.

Common questions

Q: Did an heir automatically inherit the business's state sales-tax liability?
A: No, not when both conditions stated in the letter were satisfied.

Q: Could the heir pay the estate for the business and still use this conclusion?
A: No. The letter required that no purchase price be paid to the estate.

Q: Could the heir agree to assume estate debts as a condition of inheritance?
A: Not under the letter's stated conditions for avoiding successor liability.

Q: Did the letter decide whether the client's actual facts met those conditions?
A: No.

Citations and references

• Tex. Tax Code § 151.613 (successor-liability provision cited by the letter)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8411L0606B10

Original ruling text

November 30, 1984

Dear **:

During our telephone discussion of November 27, I stated that an
individual inheriting a business would not be subject to successor
liability for state sales tax if: 1) no purchase price was paid to the
estate of the deceased; and 2) the person inheriting the business does
not assume debts or liabilities of the estate as a condition of the
inheritance. (Tex. Tax Code Ann. Sec. 151.613.) This statement is
based on the problem as presented and does not constitute a
determination of the facts concerning your client.

Sincerely,

Mark Summers
Attorney for Field Operations