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I'm trying to figure out whether a Minnesota sub of a NY corp could possibly in any way be liable for any of the Parent's tax obligations. It seems to me like the only way it could be is if all of the following are true:

1) the parent included the sub in a combined report in NY;
2) NY has a rule like the federal rule for consolidated returns where each member of the combined reporting group is liable for the tax; and
3) the parent for whatever reason didn't pay the tax.

The questions for you gurus are:

Does NY have a rule like the federal rule where all members of a group for combined reporting purposes are jointly (or jointly and severally) liable for the tax?

Is there anything I'm missing here? I have no facts besides what I told you (client is thinking of acquiring the sub and just wants to know what to ask and where to look).


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Is there anything I'm missing here?

I think you're concentrating on the determining of tax liability, but your question implies to me you're talking about collection of the parent's liability from the sub's assets. If you are, all of the sub's assets are indirectly available to the IRS for the parent's liabilities, through the sub's stock. I would assume it's the same for any of the parent's creditors who get as far as a judgment or have a security interest in the sub's stock.

It usually doesn't work the other way around. IOW, the parent's assets aren't available for payment of the sub's debts.

Phil Marti
Retired IRS Collection Officer
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