Podcast: Mergers and Acquisitions in State Taxes

In this Weaver: Beyond the Numbers episode, Shane Stewart, Savannah Brown and Brandon Hayes explore the critical role state taxes play in mergers and acquisitions, highlighting red flags, potential liabilities and strategies to mitigate risks for businesses.

Key Points:

• It’s crucial to identify state tax risks in mergers and acquisitions to avoid costly surprises.
• Both income and sales tax liabilities can arise from unexamined state tax obligations, often overlooked by businesses.
• Voluntary disclosure agreements offer a way for businesses to rectify past tax oversights and limit penalties.

This episode focuses on the often-overlooked state tax implications in mergers and acquisitions. Brown and Hayes stress the importance of identifying red flags early in the deal process, such as businesses claiming to operate only in one state. Hayes shares how sales tax issues often surface during due diligence, surprising buyers and sellers. As Brown points out, these hidden tax liabilities can significantly impact a deal’s value and future compliance.

“One of the first steps buyers need to take when assessing a deal is quantifying the potential tax exposure, which can ultimately impact the purchase price and even the success of the transaction,” Brown said. Other preventive measures involve voluntary disclosure agreements that limit look-back periods, waive penalties and assure compliance.

Proper understanding of the role of taxes in M&As can provide a path forward, protecting buyers from undue exposures and sellers from failed deals.

Subscribe and listen to future episodes of Weaver: Beyond the Numbers, on Apple Podcasts or Spotify.

©2024