Texas Tax Code 111.024 – Liability in Fraudulent Transfers
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(a) A person who acquires a business or the assets of a business from a taxpayer through a fraudulent transfer or a sham transaction is liable for any tax, penalty, and interest owed by the taxpayer.
(b) A transfer of a business or the assets of a business is considered to be a fraudulent transfer or a sham transaction if the taxpayer made the transfer or undertook the transaction:
(1) with intent to evade, hinder, delay, or prevent the collection of any tax, penalty, or interest owed under this title; or
(2) without receiving a reasonably equivalent value in exchange for the business or business assets subject to the transfer or transaction.
Terms Used In Texas Tax Code 111.024
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Comptroller: means the Comptroller of Public Accounts of the State of Texas. See Texas Tax Code 1.04
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
- Testate: To die leaving a will.
(c) In determining the intent of the taxpayer under Subsection (b)(1), consideration may be given, among other factors, to whether:
(1) the transfer was to a current or former business insider, associate, or employee of the taxpayer or to a person related to the taxpayer within the third degree of consanguinity by blood or marriage;
(2) the transfer was to a third party who subsequently transferred the business or assets of the business to a current or former business insider, associate, or employee of the taxpayer or to a person related to the taxpayer within the third degree of consanguinity by blood or marriage;
(3) the taxpayer retained possession or control of the business or the assets of the business after the transfer or transaction;
(4) the taxpayer’s business and the transferee’s business are essentially operated as a single business entity at the same location;
(5) before the transfer or the transaction occurred, the taxpayer had either been subjected to or apprised of impending collection action by the comptroller or by the attorney general;
(6) the transfer or transaction was concealed;
(7) the taxpayer was insolvent at the time of the transfer or became insolvent not later than the 31st day after the date the transfer or transaction occurred; or
(8) the transfer or transaction involved all or substantially all of the taxpayer’s assets.
(d) This section does not apply to a transfer of a business or the assets of a business:
(1) through a court order on dissolution of a marriage; or
(2) by descent or distribution or testate succession on the death of a taxpayer.