Tax and Government Filing Information Needed for M&A Due Diligence

By Bill Snow

Sellers and buyers in an M&A transaction negotiate a period of time — usually no more than 60 days — to conduct due diligence. As long as Seller is prepared to provide access to all the documents that Buyer will need, the 60-day timeline is quite doable. Buyer will need information about every aspect of the business including taxes and government filings.

Here is a comprehensive list of the kinds of things that a Seller will need to provide to the Buyer about the company’s tax status and government filings.

M&A due diligence: Taxes

  • Copies of all federal, state, local, and foreign tax returns during the reporting period and for all open years.

  • Copies of state sales tax returns during the reporting period and for all open periods.

  • Copies of any audit and revenue agency reports.

  • Copies of any tax settlement documents for the reporting period.

  • Copies of all employment tax filings for the reporting period.

  • Copies of real estate, property, or any other tax filings for the reporting period.

  • Copies of any tax liens.

  • Listing of returns and years thereof that have been audited by any tax jurisdiction and copies of related determination letters.

  • Listing and description of any pending or threatened disputes with regard to tax matters.

  • Copy of Form 2553 (S-corp Election), if applicable.

M&A due diligence: Governmental filings and reporting

  • Copies of any governmental licenses, permits, and authorizations of the company not otherwise provided hereunder.

  • Copies of all filings with, and notices to or by, governmental agencies or authorities by or to the company during the reporting period not otherwise provided hereunder, and all material documents and correspondence, including those of or in connection with any of the following:

    • Hart-Scott-Rodino

    • Securities and Exchange Commission

    • Blue Sky Administrators

    • Internal Revenue Service

    • Equal Employment Opportunity Commission

    • Food and Drug Administration

    • Environmental Protection Agency

    • any state or local environmental agency or authority

    • Occupational Safety and Health Administration

    • Immigration and Naturalization Service

    • Federal Trade Commission

    • National Labor Relations Board

  • Description of any complaints, investigations, or other informal or formal proceeding involving the company by or before a governmental agency or authority, and copies of all material pleadings, filings, correspondence, or other papers related thereto.