U.S Sales Tax

Tax Free Exits, Travers Smith
John Wertz

Tax attorney John Wertz authored an article featured in Travers Smith's publication Tax Free Exits. The article discusses the complexities of U.S. sales tax and how it impacts transactions, especially in the context of mergers and acquisitions (M&A). It delves into the concept of "nexus" — the connection that must exist for a state to impose a sales tax — and how changes in this area, especially post-Wayfair, have intensified the focus on sales tax compliance during M&A due diligence. Mr. Wertz highlights the importance of understanding sales tax obligations to mitigate potential liabilities, such as successor liability for outstanding sales tax in asset purchase transactions. Mr. Wertz also emphasizes the need for sellers to conduct thorough sales tax and economic nexus as well as maintain adequate documentation to prevent sales tax noncompliance issues prior to exit, thus ensuring a smoother transaction process and safeguarding the transaction’s value.

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