Buying and Selling a Business in Colorado
Published: April 28th, 2018
Is the business you are purchasing current on its sales, use, and other taxes?
When a business is purchased the seller must pay any sales taxes due within 10 days of the sale. The new owner may become liable for any unpaid tax on sales made by the previous owner if those taxes are not remitted. Note: discovery of the seller’s errors and prior liabilities through an audit may not occur for years after the transaction.
What should you do?
- Download the DR 0096 form.
- Engage tax counsel for M&A due diligence: consider Mergers & Acquisitions.
Will I owe tax on the assets I purchase with the business?
Use tax is commonly due on non-inventory assets purchased in an acquisition. Factors such as transaction structure, contract language, and escrow arrangements can influence tax liability. Note that purchasers cannot contractually eliminate successor liability; the Colorado DOR was not party to the sale agreement.
It’s best to be proactive: identify and resolve tax issues before an auditor contacts you. Voluntary Disclosure Agreements are unavailable once audit contact occurs.
- See our Voluntary Disclosure page
- Review our Audit Case Studies
Contact us for assistance with proactive minimization of prior-period liabilities, nexus questions, or other sales and use tax matters.