Sales tax permit

Definition

The state registration that lets a business collect and remit sales tax.

Why It Matters

Permits do not transfer in an asset sale, so the buyer registers before day one or cannot legally ring up the first taxable sale. The sharper trap is behind, not ahead: many states hold a business buyer liable for the seller's unpaid sales tax unless a clearance certificate is requested before closing, which is the successor-liability and bulk-sales machinery doing exactly what it says. Ask the state for the clearance in diligence; the seller cannot grant it themselves.

In numbers: A seller two quarters behind on remittance at $8,000 a quarter is a $16,000 bill that follows the business, not the person, in a state where no clearance was requested.