HRS § 237-43 — Bulk sales;


§237-43 Bulk sales; transfers; penalties.
(a) In any case of the sale or transfer in bulk of the whole, or a large part
of a stock of merchandise and fixtures, or merchandise, or fixtures, or other
assets or property of a business, otherwise than in the ordinary course of
trade, business, commerce, or sales, the seller shall make a written and
verified report of the bulk sale or transfer to the department not later than
ten days after the possession, or the control, or the title of the property, or
any part thereof, has passed to the purchaser. The report shall contain the
name and address of the purchaser, a brief description of the property sold and
the purchase price, the date when the sale or transfer is to be or was
consummated, and such other facts as the department may require. The purchaser
may make the report for the seller.
(b) The purchaser of the property shall
withhold payment of the purchase price until the receipt of a certificate from
the department to the effect that all taxes, penalties, and interest levied or
accrued under title 14 for taxes administered by the department against the
seller, or constituting a lien upon the property, have been paid. A
certificate shall not be issued while the department investigates (including by
audit) whether taxes have been levied or accrued against the seller. The
certificate shall show on its face that the department has had notice of the
bulk sale or transfer, and shall also show the names of the seller and
purchaser, a brief description of the property sold or transferred, and the
date of consummation of the sale or transfer, together with such other
information as the department shall prescribe.
(c) If the required report of the bulk sale or
transfer is not made, or if the taxes, penalties, and interest shall not be
paid within twenty days after the sale or transfer, or within such further time
as the department may allow, the purchaser shall be personally liable to pay to
the State the amount of all taxes, penalties, and interest levied or accrued
under title 14 for taxes administered by the department against the seller or
constituting a lien upon the property, together with penalties and interest
thereafter accruing, not exceeding, however, the amount of the purchase price.
The issuance of a certificate in the prescribed form shall be a complete
defense to the bulk sale or transfer liability imposed in the preceding
sentence, but shall not be a defense to any liability of the purchaser under
any other provision of law for liabilities and obligations. Any purchaser
succeeding to the liabilities of the seller under this section shall make a
written report thereof upon the next due date for the reporting of gross income
taxes.
(d) For purposes of this section:
"Property" means anything that may be
the subject of ownership, including every kind of asset, whether real or
personal, tangible or intangible, and without limitation, such as land and
buildings, goodwill, notes, accounts, and other intangible property. The term "property"
shall not include any interest in residential real property.
"Purchase price" means the total fair
market value, as of the date of sale or transfer, of all property transferred,
whether or not money or property is exchanged therefor.
"Purchaser" means any person who
receives property in a bulk sale or transfer, whether or not money or property
is exchanged therefor.
"Sale" means the transfer of property
for compensation.
"Seller" means any person who sells
or transfers any property in a bulk sale or transfer, whether or not money or
property is exchanged therefor.
"Transfer" means the sale,
conveyance, or distribution by any mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of title to or beneficial ownership in
property, or interest therein. The term "transfer" does not include
a bona fide, arm's length:
(1) Creation, modification, or termination of a lease
interest;
(2) Creation, modification, or release of a lien or
encumbrance; or
(3) Transfer occurring as a result of the enforcement
of a lien.
(e) Failure to make the report required by
this section shall be punishable by a fine of not more than $100. Any seller
who wilfully fails to make the report required by this section shall, in
addition to other penalties provided by law, be guilty of a misdemeanor and
upon conviction thereof, shall be fined not more than $5,000 or imprisoned not
more than one year, or both.
(f) The purchaser shall have the purchaser's
remedy against the seller for the amount of taxes, penalties, or interest paid
by the purchaser.
(g) This section supplements and does not
displace any remedies available to the department under the Uniform Fraudulent
Transfer Act and the principles of law and equity.