The following is an email from Washington State Department of Revenue Communications Director Mike Gowrylow to KIRO 7 Consumer Investigator Amy Clancy regarding the situation involving two businesses called Gill's Furniture and MFC in Tacoma.

Amy: I checked with our compliance agents and got some info on the question you asked about one company setting up an identical business in the same location at the prior business.

The bottom line is a business has to purchase 51 percent or more of the tangible assets, goodwill, inventory, etc. of a company for it to be considered a successor to the previous company and thus liable for any debts of that prior company.  The owner of a prior company working at the new company is not a factor.

Our successorship laws do not prohibit any business from opening, operating, etc.  In certain limited situations they do make the successor business liable for the predecessor business’ tax.

RCW 82.04.180 defines who is a successor. RCW 82.32.140 defines the liability of a successor and provides a means for a successor to avoid any liability. Thus, we can have a successor business which availed themselves of the protection in RCW 82.32.140, who doesn’t owe any of the predecessor’s tax.

To see the Washington Administrative Code regarding business and successors : apps.leg.wa.gov/wac/default.aspx?cite=458-20-216

Mike Gowrylow
Communications Director
Washington State Department of Revenue