Buying an e-commerce website that hasn't been collecting sales tax

November 03, 2023

by a searcher in Petaluma, CA, USA

I'm looking at an ecom website in California that hasn't collected sales tax for the 5+ years it's been around. Around 1.5/year In revenue.

If it's an asset purchase with the usual liability clauses that attorneys will draft, do I have to worry about the state coming after me post purchase? Anything specific I should include in the deal?

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Reply by a searcher
from University of Tennessee in Nashville, TN, USA

Get a competent attorney to draft your APA with indemnification clauses and possibly escrow impounds specific to the potential quantified impact (amount owed, penalties, fines, interest, etc.) and statutory limits timelines specific to CA and other jurisdictions. It is highly unlikely that, absent nexus, other jurisdictions outside of CA would request sales tax owed. Your attorney should be able to advise on risks and outcomes.

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