Buying a Business in Illinois: The Bulk Sale Notice (Form CBS-1)

Quick answer: If you’re buying a business in Illinois and the transaction is a bulk sale, you, the buyer, must file Form CBS-1 with the Illinois Department of Revenue at least 10 business days before the sale. If you don’t file in time, you can be personally liable for what the seller owes the Department, up to the reasonable value of the property you acquired. That is someone else’s tax bill landing on you personally, so this goes on the calendar the day you have a closing date.

I tell every boss the same thing: what you don’t know can hurt you. This form is a perfect example, because nothing about the deal feels wrong if you skip it. The closing goes fine, you get the keys, and the problem shows up later.

What is a bulk sale in Illinois?

The Department of Revenue’s instructions say a bulk sale occurs when, outside the normal course of business, a business entity sells or transfers the major part of either of these:

• the stock of goods that it is in the business of selling; or
• furniture or fixtures, machinery and equipment, or real property of the business that is subject to the Retailers’ Occupation Tax Act or the Illinois Income Tax Act.

Read that against your deal. If you’re buying the inventory, the equipment and the fixtures of a shop, that language is worth a careful look. If you’re not sure your purchase fits, that’s the first question for a discovery call.

Who has to file Form CBS-1, and when?

The purchaser or transferee must file. The seller may file. The deadline is at least 10 business days before the date of sale or transfer.

The instructions call that date the closing date, and the form asks for it directly. Business days, not calendar days, so count them on an actual calendar. If your closing is close, the notice has to move now. I’d also leave room, because any change to the terms means filing again.

What goes in with the form?

You enclose a copy of the financing agreement and the sales contract. The sales contract has to include a description of the property being sold, the purchase price or a statement of other consideration, and the terms for payment. It must be signed by both the seller and the purchaser.

So the notice depends on paper that has to exist already. That’s one more reason to get the purchase contract moving early rather than the week before closing. If a lender is involved, your financing timeline matters here too. See using an SBA 7(a) loan to buy a business.

Item	What the instructions say
Who files	Purchaser or transferee must; seller or transferor may
Deadline	At least 10 business days before the sale or transfer
Enclose	Financing agreement and signed sales contract
Missed deadline	Purchaser personally liable for what the seller owes the Department, up to the reasonable value of the property acquired
Terms change	Updated form immediately, with updated contract and financing agreement
Sale falls through	Letter signed by seller or purchaser explaining why
Bulk sales release	Issued only after all taxes, penalties and interest have been paid
Where to send it	Email is urged: REV.bulksales@illinois.gov; fax and mail are also listed

What does the form ask for?

Six steps, and none of them are hard if you’ve got your deal documents together:

1. The business or assets being sold, and if it isn’t the entire business, what is being sold.
2. The seller, and the seller’s attorney if there is one.
3. You, the purchaser, including your Social Security number or federal employer identification number, and your attorney if you have one.
4. The terms: the closing date, the purchase price or other consideration, and the reasonable value of the property acquired, even if that’s the same as the purchase price.
5. Anyone else who should get copies of correspondence.
6. The person submitting the form.

Step 3 raises a question you should answer before you file: who is actually buying? You personally, or a company you’re forming for the purchase? That decision is about the right legal structure, and it also feeds into whether you’ll need a new EIN.

Use the most recent revision of the form. The Department warns that an old revision may delay processing.

What is a bulk sales release, and why should you care?

The Department will issue a bulk sales release only after all taxes, penalties and interest have been paid. So filing the notice is step one, not the finish line. The release is what tells you the seller’s account with the Department has been dealt with.

That has a direct effect on how you write the contract. Protect the coins: think about what happens at closing if the release hasn’t come through yet, and put your answer in the agreement instead of hoping for the best.

One limit on this article: it covers the Department of Revenue notice and nothing else. Other agencies, and other parts of your deal, can have their own steps. The full picture is on my page about buying a small business in Illinois, and the broader checklist is in what to check before you sign.

Why talk to the Bosses’ Lawyer about this?

Because a form with a 10-business-day deadline only protects you if somebody remembers it in time. I help small business owners get the contracts and the legal foundation right before money moves, and I explain it in plain language so you know what you’re signing. I’m a Chicago attorney licensed in Illinois.

Have a closing date, or even just a business you’re circling? Book a discovery call or call 866-217-3432. If you need the Department directly, its bulk sales contact is REV.bulksales@illinois.gov or 217 782-9904.