You've likely heard about the U.S. Supreme Court's decision in the South Dakota vs. Wayfair, Inc. case, and its impacts on the e-commerce industry, consumers, and state and local governments. The June 2018 ruling overturned decades of precedent when it comes to the taxation of revenue from out-of-state sales, allowing states to collect tax where they previously could not.
But did you know that the ruling will also impact buyers and sellers of businesses?
The Wayfair case has added a new layer of complexity to the process of buying or selling a business. Although we have not yet seen new legislation from every state, it's expected that many states will act quickly to amend their sales tax laws to reflect the U.S. Supreme Court ruling.
Potential buyers and sellers should increase their due diligence around these legislative changes, and should consider:
- Evaluating sales and use tax compliance in any state in which the business has operations
- Structuring the deal to include protections in transaction documents, such as tax clearance certificates to reduce the risk of tax liability imposed on the buyer
The Wayfair case will have wide-reaching implications for all businesses, not just e-commerce retailers. If you have questions about the Wayfair case and how your business might be impacted, leave a comment below, or feel free to reach out to me directly.