In 2018, the United States Supreme Court’s decision in South Dakota v. Wayfair, Inc. substantially expanded states’ ability to require companies to collect and remit sales tax. The decision resulted in significant and complex liabilities for many companies, particularly fast-growing companies who are frequently acquisition targets. In the wake of Wayfair, there are a number of strategies that sellers and buyers may employ in drafting the merger documentation to efficiently manage and resolve pre-closing sales tax liabilities after the acquisition closes. This article will highlight several of those strategies based on SRS Acquiom experience on M&A deals.
Topics discussed in this whitepaper include:
- Defining sales tax and use tax
- Federal precedent and state law
- Define the scope of indemnity
- Determine who controls VDA filings
- Form a dedicated sales tax escrow account