It is important to hire and maintain adequate tax staff with so many transactions,
mergers, and acquisitions within companies to achieve the best outcomes and reduce
transaction risks. Compliance with tax laws helps ensures that your team obeys tax laws,
avoids penalties, and minimizes the risk of facing legal consequences. Tax due diligence
is a crucial aspect of any transaction to reveal any potential liabilities or risks. Tax
professionals play an essential role in merger and acquisition (M&A) activities due to the
potential for unique tax challenges associated with each transaction
(PricewaterhouseCoopers). Even a minor mistake in tax calculations can have damaging
to a business. In addition, even after the completion of a transaction, tax professionals
remain essential to address income tax considerations and ensure proper compliance in
tax returns.
Having a skilled tax team can help identify tax planning opportunities, such as a sale or
acquisition of another company. Tax planning ahead of time for a planned acquisition will
help to mitigate these issues and ensure an overall successful acquisition (Douglas M).
The buyer can get major tax deductions for the cost of the gained assets. The seller may
have net operating losses that can offset the tax cost. Normally buyers and sellers
discuss these terms by balancing out everything (Jacob Sheffield). In Conclusion, hiring
and maintaining adequate tax staff is fundamental to ensuring compliance with tax laws,
adjusting tax outcomes, guiding thorough due diligence, and providing strategic guidance
during transactions, mergers, and acquisitions.
For large companies, it is important for them to have a tax staff on hand to coincide with
their other accounting staff. Tax staff can handle many other items outside of the company’s
corporate/partnership tax return. Tax staff can also handle quarterly taxes such as sales tax
or payroll. It’s also possible for the tax staff to handle the personal or fiduciary returns of
executives of the company. There is a lot more cohesion if both the bookkeeping and tax
preparers are in house for the accounting of the company.
The biggest issues that arise when a company is either for sale or acquiring is what type of
sale or merger are happening. If companies become or acquire a subsidiary compared to
being completely absorbed or vice versa, the accounting and financial reporting changes
depending on the situation. Difference in how the financial statements is reported, directly
affect how the tax return reports that information. You will need a tax staff to plan
accordingly and compare the differences between all the options of a sale or merger.
References
Douglas M. Sayuk, C. (2012, August 1). Tax compliance for acquisitions: Prepare before
purchasing. Journal of Accountancy.
https://www.journalofaccountancy.com/issues/2012/aug/20125272.html
Jacob Sheffield, C. (2020, July 10). Tax considerations for today’s Mergers &
Acquisitions. Bartlett, Pringle & Wolf, LLP. https://www.bpw.com/blog/2020/07/10/tax-
considerations-for-todays-mergers-acquisitions/
PricewaterhouseCoopers. (n.d.). Mergers & Acquisitions Tax Services. PwC.
https://www.pwc.com/us/en/services/tax/mergers-and-aquisitions.html
