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Due Diligence Reviews

Will You Be Held Liable For Someone Else's Tax Debts

In most states, if you buy a significant enough percentage of a business’ assets, you can be held liable for that business’ tax debts? Many people think that if they are just buying some assets, and not stock of a business, that they have nothing to worry about. It’s quite a common misconception and unfortunately, we’ve had quite a few clients who have gotten a nasty surprise several months after closing the sale. Buyers are gone, money spent, or insolvent, and you are left holding the bag. There are some things that you can do, which are a little different state by state, to protect yourself in a case like this – we can help!

Ask The Right Questions

If you are looking to sell your business, there are a lot of things to consider.  What will buyer’s due diligence team find when they look into your state and local tax compliance? Do you have the procedures in place to make they feel confident that you have caught potential issues and dealt with them? Or are they undiagnosed and unresolved?  Regardless of what you think, what will their team think?

Reach out to Rea’s SALT team if you're looking to buy or sell a business. We will advise whether or not the entity in question is in compliance with all state and local tax obligations and provide recommendation on how to become compliant if noncompliance is discovered. Ensuring compliance, as well as advising on the transaction considerations of purchasing or selling a business, will allow you be proactive in identifying issue and to get the most bang for your buck.

If you're thinking of selling your business, consider how your tax compliance will impact the overall attractiveness of your business to a potential buyer.

In addition to state and local tax considerations associated with buying and selling a business, you are likely to realize even greater personal and professional as a business owner when you add a business valuation expert and accounting specialist to your team or trusted advisors.

Our State and Local Tax Professionals Are On Your Side

Rea brings together a group of experienced state and local tax professionals who are committed to understanding the unique tax needs of your business. For more information on any of our business tax services, contact our team of SALT professionals.