We quantify sales and use tax exposure on either side of a transaction — for buyers who need to know what they’re inheriting, and for sellers who’d rather find it before the other side does. If there’s a gap, we tell you what it costs and what it takes to close it.
Income tax exposure is generally well covered by counsel and the accountants. Sales tax sits in a gap: it’s transactional, multi-jurisdictional, and rarely anyone’s specialty on either side of the table.
In many states, unpaid sales tax attaches to the business or the assets — not only to the entity that owed it. Buying assets does not automatically leave the liability behind, and a stock deal certainly doesn’t.
For a business that filed, a state generally reaches back three to four years. For one that never registered, many states treat the period as open to the date nexus began. A target with a five-year gap has a five-year liability.
Found in week two, it’s a purchase-price adjustment. Found in the final week, it’s a re-trade, an escrow fight, or a deal that slips a quarter.
“There may be exposure here” stalls a deal. “The exposure is $1.4M, roughly $470K of it resolvable through voluntary disclosure, and here’s the timeline” lets both sides price it and move. We produce the second kind of answer.
Software companies frequently treat their product as non-taxable everywhere. A meaningful number of states disagree, and a fast-growing target has usually crossed thresholds in most of them.
Exposure isn’t static. Every month between diligence and close adds to it, and a state making contact in that window forecloses the cheapest remediation path.
The analysis is the same discipline. What changes is who the number is for and what they need to do with it.
We quantify the target’s exposure state by state and hand you a figure you can take into the negotiation — with the remediation cost and timeline priced beside it.
Nexus and taxability review of the target’s actual sales history
Exposure quantified with penalty and interest, by state and by year
Support for the escrow or indemnity number, and for the reps you want
A remediation plan you can run on day one, and we can run for you
Turnaround that fits a diligence window, not a calendar quarter
Exposure a buyer discovers is a discount. Exposure you’ve already quantified and started remediating is a line item you control. The difference is often a multiple of the tax itself.
A clean read on your own exposure before the data room opens
Voluntary disclosure filed and underway, capping the lookback
Documentation that answers the buyer’s question before it’s asked
Fewer surprises in diligence, which means fewer re-trades
A defensible position on the reps and warranties you’re being asked to sign
A diligence review has a deadline that isn’t ours to move. We scope to the window you have, tell you up front what we can establish in it, and flag early if what we’re finding warrants more.
We’ve completed over 42,000 projects across 13,000+ state and local jurisdictions since 1992, so the research is rarely starting from zero.
Our reports are built to be tested. Every figure traces to a statute, a transaction set, and a stated assumption — so when the other side pushes back, the conversation is about the assumptions rather than about whether the work is credible.
Where the exposure is quantified and certain, it’s usually cleanest to take it off the price.
Where remediation is underway but not complete, an escrow sized to the remaining risk — with a release trigger tied to the VDAs closing.
For identified state-level exposure, carved out from the general reps with its own survival period.
We file the voluntary disclosures and register the entity after close, so the liability actually gets resolved rather than inherited and forgotten.
The five places we find it most often in a target, roughly in order of how much it tends to be worth.
Every remediation path in our report is a service we perform — so the plan doesn’t depend on finding someone else to execute it.
The primary remediation route. We file the voluntary disclosures and carry them to signed, pre- or post-close.
The underlying analysis, delivered as a standalone engagement when the timeline allows a fuller study.
Post-close, someone has to file in the newly registered states. Usually us.
Diligence timelines don’t move because sales tax is complicated. We scope to the window you have and tell you at the outset what we can establish with confidence inside it.
You get accountants who work alongside your existing advisors on the sales and use tax workstream, comfortable staying in the background.
We scope to the diligence window. A focused review on a mid-market target is typically a matter of weeks, and we’ll tell you at the outset what we can establish with confidence in the time available.
Usually on income tax, which is a different discipline. We’re frequently engaged alongside a deal team’s existing advisors specifically for the sales and use tax workstream, and we’re comfortable working inside their process.
Less than people assume. Many states have successor liability provisions that attach unpaid sales tax to the business or its assets regardless of deal structure. It’s worth establishing state by state rather than assuming.
Yes, and it’s the common outcome. We file the voluntary disclosures, register the entity where needed, and take over monthly compliance so the newly acquired footprint doesn’t start accruing fresh exposure.
Whether you’re a week into diligence or six months from going to market, the first conversation establishes whether sales tax is a real issue in this deal or a box to tick.
