Protecting Your Clients From Sales & Use Tax Liability

NOTE: THIS ARTICLE WAS CO-AUTHORED BY 
CHIRAG N. PATEL, ESQ. , SENIOR ASSOCIATE WITH SHAH & ASSOCIATES, P.C. 

Whether our clients are purchasing an existing business under a newly formed entity (corporation, LLC or other) or are purchasing the ownership interests (Stock or Membership units) of an existing company, both parties to a contract are typically eager to Close the transaction on the anticipated settlement date after all remaining contract contingencies have been satisfied. Among the myriad of liabilities from which we need to protect our Buyer-client is that of back owed Sales & Use taxes.

How can we protect our Buyer-client from liabilities arising out of the Seller’s failure to pay sufficient sales & use taxes?