Sales Tax Liabilities Concern

To preface - yes, I will be talking to my attorney about this issue…just trying to hear people’s experiences…

I’m under LOI for a business in Texas. It became clear to me that some of the services offered by the business require them to collect sales tax.

However, the business has not been collecting sales tax for any service for the last 15 years.

From the research I’ve done, an asset sale does not absolve a purchasers liability and I, the buyer, could be liable for all past sales tax due, up to the purchase price of the business.

Given the fact that the business is 15 years old, there could be substantial liability - potentially up to the full purchase price of the business.

Texas allows you to request a no tax due certificate, but the concern there is that would potentially kick off an audit that could be terrible for the seller.

Has anyone encountered this situation before? Is this a potential deal killer?

One thought I had is I think Texas’ sales tax audits can go back 4 years starting from when you first file. So maybe calculate potential liability over the past 4 years of sales and require that amount to be held in escrow or as a seller note.