A transfer of business occurs any time a business activity or business asset is transferred outside of the normal course of doing business.

The usual way that a business is transferred is through a sale, lease, reorganization, merger or consolidation. However, a business can also be transferred through foreclosures, inheritances and bankruptcy.

In any transfer, the transferor is the seller or former owner/operator of the business being transferred and the transferee is the buyer or new owner/operator of the business.

It is not necessary for a transfer to occur directly between the former owner/operator and the new owner/operator. Third parties such as landlords, financial institutions and the courts are often intermediaries for transfers.

Some common situations that ARE NOT a transfer of business;

• Sale of corporate stock.
• Corporate name change.
• Sale of assets in the ordinary course of business.
• Transfer of employees only or transfer of payroll function only.
• A corporation changing from or to Subchapter S status.

A transfer of business may have important consequences for your business's UI tax rate and reserve account. The impact can be positive if you take over the UI account of a business with a low rate. The impact can be negative if you take over the account of a business with a high tax rate.

When you transfer or acquire a business, you must let us know within 30 days of the sale/acquisition. Notice can be done by telephone, by completing a Report of Business Transfer, Form UCT-115 , or by other written notice with information about the transfer.

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Successorship occurs when all or a portion of the former owner's UI account is transferred to the new owner due to a transfer of all or a portion of the business. Successorship is mandatory when related interests are involved and is optional for unrelated interests. See D: When You Must Take Over the UI Account Experience of the Former Owner/Operator.

When successorship occurs, the employer who has taken over the former owner’s/operator’s account is referred to as the "successor". The employer whose UI account (and business activity) was taken over is referred to as the "predecessor". The words successorship, successor and predecessor are used in the legal language of the UI law.

If you are acquiring an existing business, you may have a choice as to whether or not you take over the UI experience of the former owner/operator. The following sections give you more information regarding business transfers and taking over the former owner’s/operator’s UI account.

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The Report of Business Transfer http://dwd.wisconsin.gov/dwd/forms/UI/PDF/UCT-115.pdf is the primary form used by the department to obtain information on business transfer. The form is generally requested from both parties. The form can also be used by the new owner/operator to make a written application to take over the UI account of the former owner/operator.

The sections on the forms are numbered and labeled. Following is a brief description of these sections.

1. Former Owner/Operator

   This information will identify the former owner/operator. It is important to list the current mailing address and telephone number, which may have changed since the transfer. When completing the form, if there is some information which you do not know, enter "unknown" in the space or leave it blank.
    

2. New Owner/Operator

   This information identifies the new owner or operator who acquired the business. It is important to list the names and ownership percentages of the individuals who currently own or control the business.

   When completing the form, if there is some information which you do not know enter "unknown" in the space or leave it blank.

    
3. Relationship Between Parties

   It is necessary that you compare the former ownership with the current ownership and indicate if there are any common owners or any that are related through immediate family. See the examples identified in the questions.

   If there is no relationship or common interest at all between the parties, then the new owner/operator should complete Section 5, Option of New Owner/Operator of the form. The new owner/operator can apply to take over the UI experience of the former owner/operator or can decide not to apply. While the application to take over the UI account does not necessarily have to be done when this form is completed, there is a deadline for making a timely application. The deadlines are shown in Section 5.

    
4. Effective Dates

   Enter the effective or legal date when the new owner/operator has control over the business transferred. This is known as the transfer date.

    
5. Option for New Owner/Operator

   This section provides the new owner the option to acquire the UI experience of the previous owner, elect not to acquire the experience or to request additional information before making a decision.

    
6. Method of Transfer

   Provides a checklist of the methods of selling/acquiring a business (sale, lease, reorganization, merger, etc.).

    
7. Assets Transferred

   Provides a checklist of assets sold/acquired (real estate, inventories, accounts receivable, etc.).

    
8. Continuation of Business

   This section asks whether the new owner/operator continued the business without interruption and in the same location. If there was a period of time when the business was not operated or there has been a change of business location, please provide additional information.

    

9. Number of Employees

   Asks the question how many employees worked in the transferred business prior to the transfer and how many employees continued with the new owner/operator.

    
10. Identify Nature of Business Transferred

    This could be information about the method of transfer (third party transfers, leases, reorganizations, foreclosures, estates and receiverships) or information about which assets were transferred and which were not, or information describing that two or more transfers took place and the dates of those transfers.

     
11. Total or Partial Transfer

    Indicate whether the transfer was total or partial.

    If all the former owner’s/operator’s business activity has been transferred and they will no longer have payroll, the transfer is total. In a total transfer, the former owner/operator must tell us if there will be payroll after the transfer date for closing of accounts and liquidation of assets.

    If the former owner/operator will continue to operate some portion of business they operated before the transfer, the transfer is considered partial.

     
12. Required Signature

    This form can be submitted on behalf of either the former or new owner/operator. In some cases the form can be submitted on behalf of both people. The form should be signed by the person submitting the form or their representative such as an attorney or an accountant.

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If a transfer occurs between employers that are owned or controlled by similar interests or members of the same immediate family, taking over the UI account experience of the former owner/operator is mandatory. Some examples are a sole proprietor incorporating his or her business, a subsidiary corporation merging with the parent, and a person transferring a business to a spouse, child or parent or a seller and a buyer who have common ownership or control.

If a transfer occurs between employers that are owned and controlled by unrelated interests, taking over the UI account experience of the former owner/operator is optional. To qualify for this option, the new owner/operator must file a written application by the contribution report deadline for the quarter following the quarter in which the transfer occurred.

Because of this application deadline, it is important that employers notify us immediately of transfers and acquisitions of business or assets.

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If you are a new owner/operator of a business but are not taking over the UI account of the former owner/operator, and are not already an employer under the UI law, you become an employer under the Wisconsin UI law as of the date of the transfer.

As a newly covered employer, you will have all other aspects of a new UI employer including:

• The tax rate for new employers for the first three years.
• The first UI tax report deadline, which is:
   

• The deadline of the quarter following the quarter in which the employer became covered; or

• January 31, for those employers who became covered in the fourth quarter of the year.

To obtain more information on business transfers and taking over the UI account of the former owner/operator, contact us at:

E-mail: taxnet@dwd.wisconsin.gov

or

Telephone: (608) 261-6700
 

Deaf, hearing or speech-impaired callers may reach us through WI TRS.