I Serving Clients
Purchase contracts alone can be
insufficient to protect against successor liability, leaving the purchaser with tax assessments
that can reach millions of dollars.
Buyers and sellers both face the
potentially costly risks of unknown tax liabilities affecting the transaction. The buyer faces the
risk of inheriting the liability as successor liability. The seller faces the risk that the buyer's
due diligence team will be ultra-conservative in protecting the buyer. They will likely determine
potential liabilities more aggressively than state auditors would, putting the seller at a greater
disadvantage on price and/or escrow amount required in a seller indemnification agreement.
For buyers, Sales Tax Colorado will
help identify potential undisclosed and unknown liabilities to protect the buyer from inheriting
them. We also go beyond indemnification agreements and handle the various states' Bulk Sale
Notifications or similar requirements to statutorily relieve the buyer from inheriting the seller's
Upon notification, states often then
take an immediate look at the seller's situation. This process moves along fairly quickly because
most states are limited on how long they have to make an assessment. If a buyer unknowingly
inherits liabilities, our specialists can help bring them to a satisfactory resolution.
For sellers, we challenge the buyer's
due diligence findings and push back on ultra-conservative positions to protect the selling price
and to reduce the escrow amount and time frame required. With a game plan in place, sellers are
better prepared to negotiate a fair price and acceptable terms. We can also help sellers identify
and resolve, or put a plan in place to resolve, their Sales & Use Tax exposure. This limits the
Some common mistakes buyers and
sellers make in mergers and acquisitions can plague even those who thought they were well
protected. IRS code and taxability factors are often considered during an asset purchase, a stock
transfer, or contribution of assets. This can lead to unexpected consequences concerning Sales or
Use Tax liabilities. For income tax purposes the liabilities generally go with stock transfers but
not asset purchases. In most states, sales tax liabilities can be transferred in an asset sale.
Problems can arise when there are assets in multiple states. Many states exempt casual sales of
business assets from Sales & Use Tax but some states will tax the transaction. The home state's
laws on Casual Sale exemptions or taxability are often incorrectly assumed to be standard. Also,
structuring transactions as "Tax Free" for IRS purposes can void certain Sales & Use
Let Sales Tax Colorado's professionals
identify and evaluate your best options before the transaction takes place. Sales Tax Colorado can
also provide a second opinion and assist in renegotiating the terms of a merger or acquisition
Voluntary Disclosure Agreements ("VDA") can also
play an important role in Mergers and Acquisitions. Sales Tax Colorado frequently negotiates VDAs
with multiple states. Some of our most recent VDAs have resulted in states forgiving past debts as
long as the company collected going forward. In the other situations we negotiated penalty
abatement, reduced interest charges, and shaped shorter look-back periods which reduced the tax
At Sales Tax Colorado, we serve
businesses that want to keep their competitive edge by navigating the ambiguous, constantly
changing, and highly intricate maze of Sales & Use Tax regulations.
us today for a no-obligation
consultation about your Sales & Use Tax issues.