Make him pay the tax debt from the sale proceeds.
Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.
Buying all the assets of a business is called a Bulk Sale. In NY, the buyer is required to file a form with the New York State Tax Department, identifying the terms of sale. If you did not, then you can be liable for the taxes owed by the seller, if any. A good lawyer in such a purchase (and you should have one for something like this) will not only file the form, but will do a search of unpaid tax liens, and require them to be paid in the contract. If you screwed up, there is not much you can do, except sue the seller to collect.
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You say you are buying rather than have bought the assets. If the transaction is not consummated you have time to correct it. Basically your purchase price shoud be $1000. It is better to consult an attorney up front rather than in the middle of a transaction so now I have to recommend a NY Attorney. Search "Find a Lawyer" on AVVO. You now have to sue him for fraud.
Disclaimer of California Attorney. Laws differ from state to state. Although the above response is believed to be accurate, it should not be relied upon as any type of legal advice because the information provided is incomplete. It is intended to educate the reader and a more definite answer should be based on a consultation with a lawyer. No attorney client relation is formed with me without a written contract. Good Luck starts with a strategy and a plan. Robert J. Suhajda, MS,CPA Attorney-At-Law 17721 Norwalk Blvd. #43 Artesia, CA 90701 562-924-8922 Tax Relief Lawyer. Former financial auditor and controller. Admitted to US Tax Court, Income Tax, IRS representation, Fiduciary income tax returns, Estate and Gift tax returns, Homeowner Association Strategist.
If the sale is not yet consummated I would suggest you look into a contract clause requiring that the amount of the tax liability be held at closing in escrow and that it be paid directly to the taxing authority holding the lien. You definitely need to see a NYS attorney for help in doing this or something similar, according to local law.