How to Complete and File New York Form AU-196.10: Bulk Sale Notification

If you are buying all or part of a New York business’s assets outside its ordinary course of business, you (the purchaser) must file New York Form AU-196.10 with the Department of Taxation and Finance at least ten days before paying for or taking possession of the assets, whichever comes first. Filing on time protects you from inheriting the seller’s unpaid sales and use tax debt. Skipping it can make you personally liable for that entire balance, up to the purchase price or fair market value of the assets, whichever is higher.¹

When the Filing Is Required

Under New York Tax Law Section 1141(c), a bulk sale happens whenever someone registered to collect sales tax sells, transfers, or assigns any part of their business assets outside the normal course of business. Business assets covers a broad range: tangible personal property like furniture, fixtures, equipment, and inventory, plus real property and intangibles such as goodwill.²

A restaurant owner selling all kitchen equipment and the lease to a new operator, a retail shop liquidating its entire inventory to one buyer, a manufacturer transferring its production line — each qualifies. The rule turns on the phrase “otherwise than in the ordinary course of business.” A retailer ringing up customers one at a time is operating normally; that same retailer selling the remaining stock in one bulk transaction is not.

The notification requirement applies regardless of whether the seller claims to owe any tax, whether the buyer knows of any outstanding balance, and whether any tax is actually owed.¹ Assume you need to file, then work backward from there.

What Form AU-196.10 Asks For

The form is divided into three sections. Getting the details right the first time avoids a revised filing and possible delays at closing.

Section 1: Mailing Addresses

Provide the name, street address, city, state, zip code, and phone number for the purchaser (or the purchaser’s representative), the seller (or the seller’s representative), and the escrow agent if one has been designated. The Tax Department uses these addresses to send its response, so list someone who can act quickly on either a release or a notice of claim.³

Section 2: Vendor Identification

Enter each party’s Certificate of Authority identification number (the number issued when a business registers to collect New York sales tax), the purchaser’s and seller’s legal names, any trade names or DBAs, each party’s business location, and the seller’s last day of business. The form does not ask for Social Security Numbers or federal EINs; it tracks businesses through their Certificate of Authority numbers.³

Section 3: Details of the Sale

Section 3 collects the financial and logistical specifics: the scheduled date of sale, the location of the property at the time of transfer, the type of business or property being sold, and the total sales price broken down across six asset categories (tangible personal property, motor vehicles, merchandise inventory for resale, manufacturing equipment and tools, real estate, and intangibles such as goodwill).

Do not reduce the listed sales price by any mortgage or other liability the purchaser assumes. Report the full value. Enter the escrow fund amount, the name and address of the bank holding the escrow, and the account number. Describe the terms and conditions of the sale, and attach a copy of the purchase contract.³

How and Where to Submit

The completed form must reach the Bulk Sales Unit at least ten days before you pay for or take possession of the business assets, whichever happens first. There are three delivery options:²

Registered mail (the method specified in the statute itself).
Certified mail with return receipt requested.
Hand-delivery to the Tax Department in Albany.

If you use any other delivery method, the notice is not considered effective until the date the Tax Department actually receives it, and the burden of proving receipt falls on you. Mail the original to:

NYS Tax Department
TDAB — Bulk Sales Unit
W A Harriman Campus
Albany, NY 12227-0299³

If you are not using the U.S. Postal Service, the form directs you to Publication 55 for a list of designated private delivery services. There is no electronic filing option; the form must be mailed or hand-delivered.

What Happens After You File

Within five business days after receiving a properly completed and timely filed Form AU-196.10, the Tax Department will send the purchaser one of two documents:²

Form AU-197.1 (Release): the seller has no unpaid sales taxes and no audit is pending, so you can pay the full purchase price and close.
Form AU-196.2 (Notice of Claim): the seller owes unpaid sales tax, is scheduled for review, or is currently under audit. Do not pay the seller until the review is complete.

The Tax Department considers the form received on the date it arrives at the Bulk Sales Unit, but no earlier than ten days before the scheduled sale date or the actual sale date, whichever is later. Mailing months ahead does not start the five-day clock any earlier.

If the department fails to issue Form AU-196.2 within those five business days, or mistakenly sends a release when the seller actually owed tax, the purchaser is not liable for the seller’s unpaid balance.² That protection is the whole reason to file.

If You Receive a Notice of Claim

Getting Form AU-196.2 does not kill the deal, but it changes how money moves at closing. Place the full purchase price into an escrow account rather than paying the seller directly. The Tax Department then has up to 90 days from receiving Form AU-196.10 to notify both parties of the total sales tax it claims the seller owes.¹

Once the department issues that final amount, you may pay the claimed tax out of escrow, up to the purchase price or fair market value of the assets, whichever is greater. Any remaining escrow balance goes to the seller. Paying this way satisfies your obligation to the seller for the sale.²

If the department does not issue its claim within 90 days, you are released from any further obligation to withhold payment from the seller.¹

One caveat even if you receive a clean release: the purchased assets may still be subject to existing tax liens if the seller has outstanding warrants or judgments for past unpaid taxes. A release clears your personal liability. It does not necessarily wipe liens off the assets themselves.²

Filing a Revised Form

If anything on the original changes, most often the closing date, file a revised Form AU-196.10 with the updated information and write “Revised” at the top. The same applies if any information on the original was wrong or unavailable when you filed.² Deals shift by a few days or weeks all the time, and the Tax Department expects an updated filing rather than reliance on an outdated notice.

What Happens if You Skip the Filing

A purchaser who fails to file Form AU-196.10 becomes personally liable for whatever sales and use taxes the seller owed the state, capped at the purchase price or the fair market value of the assets transferred, whichever is higher.¹ Pay $300,000 for a business whose assets are appraised at $350,000, and your exposure is $350,000.

The state can assess and enforce this liability using the same tools it uses to collect tax directly: warrants, bank levies, and asset seizures. You also face liabilities and remedies under Article 6 of the Uniform Commercial Code on top of the tax exposure.¹ The form itself has no filing fee.

The statute also creates a first-priority lien on the sale proceeds when the purchaser fails to notify the state or when the Tax Department informs the purchaser that a possible claim exists. At that point, the purchaser is prohibited from transferring any money or property to the seller up to the amount of the state’s claim.¹ A buyer who ignores the lien and pays the seller anyway ends up paying twice.

Federal Reporting Is Separate

Filing Form AU-196.10 satisfies your New York obligation. It does not cover federal reporting. When a business asset sale involves goodwill or going concern value, and most do, both buyer and seller must file IRS Form 8594 (Asset Acquisition Statement) with their federal income tax returns for the year the sale closes. Both sides must report matching allocations across the IRS asset classes, and failure to file a correct Form 8594 by the return due date can result in penalties under IRC Sections 6721 through 6724.⁴

1
New York State Senate. New York Tax Law Section 1141
2
New York State Department of Taxation and Finance. Tax Bulletin ST-70 – Bulk Sales
3
New York Department of Taxation and Finance. Form AU-196.10 – Notification of Sale, Transfer, or Assignment in Bulk
4
Internal Revenue Service. Instructions for Form 8594