In the Telecom, Cloud or other SaaS-based business? Thinking about an acquisition? Sale? Soliciting or making an investment in a Regulated/Taxed service provider?
Want to know your “best” and “worst” case exposure scenarios with respect to unpaid or underpaid State & Local Taxes, 911 and other regulatory fees so you can mitigate exposure, plan for a sale (or acquisition), or simplify the due diligence of an upcoming transaction?
Want to do it for a reasonable fixed fee?
Marashlian & Donahue, PLLC, is pleased to collaborate with Global Strategic Accountants, LLC to deliver a one-of-a-kind, consultant drive, attorney-backed “Regulated Asset Exposure Quantification” solution.
Due diligence is a necessary pre-requisite when purchasing, selling, investing in, or spinning off an entire company, a segment of a company, or a substantial asset.
Before the completion of the transaction, each party to the transaction should be prepared to perform a proper financial tax, and regulatory review for past performance to ensure the underlying asset has been well protected through the activities of its owner(s). Otherwise, any failure of performance can affect the value of the asset you are purchasing.
Sales taxes and many regulatory fees apply to any sale or purchase, regardless of whether the target company is in a profit or loss situation, or whether the transaction is structured as an Asset or Control acquisition. The buyer and seller must understand the extent to which they may be liable for past and future audit risk and exposure to unpaid or underpaid taxes and fees.
What is Tax & Regulatory Fee Due Diligence?
Tax and Regulatory Fee due diligence is a comprehensive examination of the different types of taxes and fees that may be imposed upon a business operating in the Communications Services and Information Technology industries, including providers of VoIP, SaaS, and other enhanced or “cloud based” services. Most frequently employed on the buy side of a transaction, the goal of conducting a communications tax and regulatory fee due diligence is to uncover significant potential tax and/or regulatory fee exposures.
Once discovered, potential risks can be mitigated or eliminated in a variety of ways.
Escrows are a common feature of transaction documents as one way of reducing successor liabilities. Sometimes, however, potential exposures can be so material that escrowed funds will not provide a sufficient remedy. In these circumstances, alternate transaction structures, purchase price reductions, installment sales, and earn-outs can all provide effective protection to a buyer. When a company fails to ever file a return, there most likely will be no time limit on the life of the exposure, since tax statutes of limitations do not run where a return has never been filed. Recommending the target to file amended returns or entering into voluntary disclosure agreements with relevant tax authorities to remedy non-filing issues can cure these problems.
While the facts often bear out that the benefits of performing a Communications Tax and Regulatory Fee due diligence can far exceed the costs, the sad reality is that the historically high cost of the due diligence process and the all too frequently unreliable, wildly divergent results of the due diligence (i.e., Buyer financed due diligence tends to OVERSTATE exposures whereas Seller financed due diligence can UNDERSTATE exposure), makes the entire process unpalatable, often creating more problems than are solved.
THAT IS, UNTIL NOW! Thanks to our revolutionary Regulated Asset Exposure Quantification Service.