CORPORATE EXCISE TAX LIEN
If the transaction is not in the ordinary course of business, and involves the sale of all or substantially all of a corporation's assets in Massachusetts, then the property may be subject to a corporate excise tax lien in favor of the Commonwealth for all unpaid taxes. In order for the property to be free of this lien, it is necessary to obtain a corporate excise tax lien waiver from the Massachusetts Department of Revenue. To obtain this waiver, it is necessary to file an application with the Department of Revenue describing the terms of the proposed sale. Assuming the corporation is current in its tax remittances, the waiver will be granted and should be recorded with the deed. See Mass. Gen. L. c. 62C, Section 51 for further information.
In the event the transfer is in the ordinary course of the corporation's business, or does not involve the sale of all or substantially all of the assets of the corporation, a statement to that effect should be included in the deed. Typically, this statement will be relied on by future conveyancers as evidence that no corporate excise tax lien arose.
If you are passing on a title for which there is no statement of inapplicability of a corporate excise tax lien, or a corporate excise tax lien waiver is not recorded, an exception must be taken in the policy as follows:
Possible corporate excise tax lien arising from the transfer by [corporation X] to
______________ by deed recorded at Book ______, Page ________.
A corporate excise tax lien arises automatically at the time of sale and remains in force for three (3) years. If the transaction in question has been of record for more than three (3) years without any enforcement of the lien, then the above exception can be omitted from Schedule B of the policy.
A sale of all or substantially all of a corporation's Massachusetts assets should be distinguished from a sale of all or substantially all of the corporation's assets generally. The transfer of all or substantially all of a corporation's assets (whether or not such assets are located in Massachusetts), like any other transaction out of the usual course of business, requires a vote of the stockholders.