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Spring Branch Independent School District v. Southwest Precision Printers, L.P.

Court of Appeals of Texas, Fourteenth District

November 14, 2019

SPRING BRANCH INDEPENDENT SCHOOL DISTRICT, CITY OF HOUSTON, AND HARRIS COUNTY, TEXAS, Appellants
v.
SOUTHWEST PRECISION PRINTERS, L.P., Appellee

          On Appeal from the 133rd District Court Harris County, Texas Trial Court Cause No. 2016-41614

          Panel consists of Chief Justice Frost and Justices Spain and Poissant.

          MEMORANDUM OPINION

          MARGARET "MEG" POISSANT JUSTICE

         This appeal arises from a suit to collect delinquent taxes on business personal property. On June 17, 2016, appellant Spring Branch Independent School District ("District") filed suit against Page International Communications, L.L.C. ("Page"). Appellants the City of Houston ("City") and Harris County, Texas ("County"), subsequently intervened. On August 29, 2016, a Chapter 11 involuntary bankruptcy proceeding was filed as to Page. At that time, appellants learned Page and appellee Southwest Precision Printers, L.P. ("Southwest") had entered into a Royalty Agreement[1] ("Agreement") on March 30, 2016, for the purchase of certain assets. The District, the City and the County added Southwest as a defendant on the theory of successor liability pursuant to section 31.081 of the Tax Code and dismissed Page. See Tax Code § 31.081. Section 31.081 provides:

(a) This section applies only to a person who purchases a business, an interest in a business, or the inventory of a business from a person who is liable under this title for the payment of taxes imposed on personal property used in the operation of that business.
(b) The purchaser shall withhold from the purchase price an amount sufficient to pay all of the taxes imposed on the personal property of the business, plus any penalties and interest incurred, until the seller provides the purchaser with:
(1) a receipt issued by each appropriate collector showing that the taxes due the applicable taxing unit, plus any penalties and interest, have been paid; or
(2) a tax certificate issued under Section 31.08 stating that no taxes, penalties, or interest is due the applicable taxing unit.
(c) A purchaser who fails to withhold the amount required by this section is liable for that amount to the applicable taxing units to the extent of the value of the purchase price, including the value of a promissory note given in consideration of the sale to the extent of the note's market value on the effective date of the purchase, regardless of whether the purchaser has been required to make any payments on that note.
(d) The purchaser may request each appropriate collector to issue a tax certificate under Section 31.08 or a statement of the amount of the taxes, penalties, and interest that are due to each taxing unit for which the collector collects taxes. The collector shall issue the certificate or statement before the 10th day after the date the request is made. If a collector does not timely provide or mail the certificate or statement to the purchaser, the purchaser is released from the duties and liabilities imposed by Subsections (b) and (c) in connection with taxes, penalties, and interest due the applicable taxing unit.
(e) An action to enforce a duty or liability imposed on a purchaser by Subsection (b) or (c) must be brought before the fourth anniversary of the effective date of the purchase. An action to enforce the purchaser's duty or liability is subject to a limitation plea by the purchaser as to any taxes that have been delinquent at least four years as of the date the collector issues the statement under Subsection (d).
(f) This section does not release a person who sells a business or the inventory of a business from any personal liability imposed on the person for the payment of taxes imposed on the personal property of the business or for penalties or interest on those taxes.
(g) For purposes of this section:
(1) a person is considered to have purchased a business if the person purchases the name of the business or the goodwill ...

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