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Q: I recently purchased a restaurant liquor license at a sheriff’s sale.  I intend to use the license at a restaurant of mine.  The license needs to be renewed and transferred and there are taxes due to the State Department of Revenue in the approximate amount of $16,000.00.  Do I have to pay this?

A:  Yes, since the tax liability stays with the license.   This is because the taxes due to the Commonwealth of Pennsylvania are in essence a statutory lien, which is not divested or released by the judicial sheriff’s sale as in the case other creditors.  The Liquor Code mandates that the Pennsylvania Liquor Control Board may not grant a renewal of or approve a transfer of a liquor license unless both the Pennsylvania Department of Revenue and the Pennsylvania Department of Labor and Industry notifies the PLCB that the state taxes are current and that each tax department clears the license.  If there are any state taxes and reports that are outstanding the clearances will not be issued, and consequently the PLCB will be prohibited from either approving a renewal or a transfer of the license.

Just because the $16,000.00 tax liability belongs to the prior owner of the license the Pa Department of Revenue will in all probability require payment of that tax liability from you before the tax clearance is issued.

Also, a practical matter, check with the PLCB to determine the number of years that your license is to be renewed and/or validated, so the license can be cleared of taxes for each license term involved.

You should engage both an attorney and an accountant so as to help you obtain the legally required tax clearance from the Pennsylvania Department of Revenue and so proceed to both renew and transfer the license.