Sales/Use Tax Traps in a Merger

Recently a client asked us to comment on their proposed merger plans. Mergers are always happening, so I thought it would be worth your while for us to comment on this to our friends and clients at large.

The basic facts were that, for various reasons, our client planned to simplify their corporate structure. The old structure consisted of a number of limited partnerships, limited liability companies, corporations and even a US branch of a foreign corporation. They planned to get down to just a few legal entities in the US by contributing member interests in the LLCs and merging several corporations out of existence. The question for us to comment on revolved around what would be the sales/use tax impact of such a transaction.

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What Did The Mayan Calendar Say About State Taxes in 2012?

There's no indication that Nostradamus or the Mayans predicted anything state tax wise for 2009 , but we can make predictions based on how the economy is going.

Trouble in CA

We all know that California is in deep fiscal trouble. Back in July, 2009, CA was unable to meet its bills for the second time this year and the state started issuing IOUs. In fact, as reported by CNNMoney.com at the time, some 28,750 IOUs worth $53.3 million were to have been issued initially, mainly for personal income tax refunds. CNN said this at the time: "The state's fiscal condition is disastrous. Officials passed a budget in February, but declining tax revenues have opened up a $26 billion deficit."

California is in trouble, no doubt. But according to a study by the Pew Center on the States, so are 9 other states. It's interesting to look at what states are named and to consider what impact this will have on state taxes.

9 Other States in Trouble

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