Misclassification of W2 employees as 1099 subcontractors with seller

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by an investor from Queen's University
in Toronto, ON, Canada

1yr ago

Misclassification of W2 employees as 1099 subcontractors with seller

Anyone know a lawyer or tax accountant who has dealt with this in an acquisition? Seller didn't pay the full amount in payroll taxes.. wondering how this liability transfers to the buyer

1 Like

252 Views

reply by a professional 1yr ago
from York University in Toronto, ON, Canada

Great points ^redacted‌. Hard to believe buyer’s counsel would miss bulk sales compliance if applicable in OP’s circumstances but it is possible

reply by a professional 1yr ago
from University of Virginia in Holmes, NY 12531, USA

terrific posts, also definitely relevant to note - while it ought to be checked out at the diligence stage, buyer's counsel needs to, among other items, check all of whether the deal is governed by the ;laws of one of the few states that still have their versions of "old" UCC Article 6 on their books (much stricter in re: bulk sale liability, but repealed most places); whether the jurisdiction has other sneaky successor liability laws with respect to taxes; and as ^redacted‌ well notes, if a tax clearance certificate is needed in the jurisdiction in order to best ensure a clean bill of health. And, I always feel like it can't be emphasized enough, buyer *really* wants to work for as robust an indemnity as possible (both tax-specific and more broadly) and as lengthy survival as possible.