It’s a common scenario: A company has decided to sell, then due diligence turns up a $2 million risk in past sales tax obligations and compliance. The buyer looks to secure against the risk via escrow – on the conservative, high side – and requires the seller to mitigate the risk.
Let’s say you’re the seller. Do you have solid positions and reasons for your sales tax decisions? Can you defend your sale tax position to minimize the escrow’s impact?
At first glance, sales tax risk might be considered immaterial to a merger or acquisition, but when you consider that up to 10% of a business’s overall revenue could be exposed, compounded over multiple years, including penalties and interest for non-compliance, and you can see that sales tax risk can become a deal killer.
What steps can you take to ensure it doesn’t happen to your business?
Source: taxconnex.com
