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Case
Studies
Exposure Resolution Spurns '"Big 4'" Firm's Due
Diligence Claim - Save's Seller ~$780K
Successor Liability Issue
Resolved
A purchaser engaged a Big 4 firm
to access the potential liabilities of a target company (The Seller). The Big 4
firm estimated that $900k Sales Tax exposure had accumulated over the prior 6
years. The Seller contested the estimate and brought in O&A to provide a
second opinion and then to resolve the matter on their behalf. We believed the
Big 4 firm estimated taxes based upon an ultraconservative view of what was
taxable. This favored the Purchaser who required the Seller to put the full
estimated amount due in escrow for each state.
We negotiated
Voluntary Disclosure Agreements with multiple states. We obtained prospective
agreements with some where the states forgave the past and just required the
company to register and collect going forward. In the other situations, we
negotiated penalty abatement, reduced interest charges and a shorter look-back
period which reduced the tax amount due. Our client got money back every time
we received an agreement from a state indicating they owed less than the Big 4
firm's claim.
The
result: We reduced our client's liability from $900k to ~$120k freeing up
the ~$780k they had to place in escrow to protect the Purchaser.
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Use Tax issues.
