Tax Clearance Letters: Don't Buy Tax Liability

If you are buying a business it is important to get a statement from the seller stating that all taxes have been paid and that you, the buyer, will be free from liability for any unpaid taxes. As the buyer of even a portion of a business, you could be held responsible for the previous owner's liabilities. You should make sure that the seller provides proof that there are no hidden liabilities.

The seller of the business should contact the Michigan Department of Treasury at 517.636.5260 to obtain Form 514 to request a Conditional Tax Clearance Request letter, or you may access the information online at www.michigan.gov/taxes . Treasury will only provide the Tax Clearance Letter to the existing owner, not the buyer. However, it is wise to request and obtain a copy of this Tax Clearance letter from the seller before the closing date or before signing any purchase agreements. More information about Tax Clearance can be found at the Taxes Web site.