ETS Tax Intelligence: Implementing A Successful M&A Transaction

M&A implementation

Situation

When contemplating a merger, acquisition, reorganization, or divestiture (“M&A”) transaction, a structured, cohesive plan can assist employers in achieving desired outcomes.  Continuing from last month’s ETS Tax Intelligence, which focused on planning for a successful M&A transaction, the third phase of an M&A transaction focuses on implementation of the strategic plan, also referred to as the execution phase.  As part of Implementation, meeting state compliance requirements is critical to avoiding interest and penalties. State workforce agencies (“SWAs”) use sophisticated SUTA Dumping Detection Systems (SDDS) to identify unreported employee movements between legal entities.  Over 4,500 transactions were flagged in 2015 resulting in almost $40 million in total tax assessments.*

Solution

Once the effective date of the M&A transaction has passed, employers must turn focus to executing the strategy developed during Planning/Design:

As part of Implementation, those charged with unemployment claims administration should update their systems to reflect the post-transaction structure.  This will help ensure claims continue to be received timely, accurate benefit payments are made to claimants, and benefit charges are assigned to the proper employer.

Value

The compliance requirements associated with an M&A transaction can be complex and time-consuming, especially when employers deal with such events on an irregular basis.  Equifax assists employers during the Implementation phase of M&A to meet the burdensome state compliance requirements and utilizing wage base carryover provisions to mitigate employment tax overpayments.  For more information, please contact Pete Krieshok at (314) 214-7325 or via e-mail at pete.krieshok@equifax.com.  You can also visit our corporate blog for information on other employment tax matters that might impact your organization.

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*Latest available information from the Employment and Training Administration (U.S. DOL) UI Handbook No. 401, Items 59 and 61 on the ETA 581 reports for CY 2015.

About Sam Roberts

As an Employment Tax Senior for Equifax Workforce Solutions, Sam assists employers with complex employment tax matters including mergers and acquisitions, unemployment tax, tax authority representation, strategic planning, best practices, and compliance. Sam started his career in 2009 with Equifax Workforce Solutions as an Employment Tax Associate. He graduated in 2009 with a BS-Accounting from Trinity Christian College in Palos Heights, IL and currently holds both a Certified Public Accountant (CPA) license and Certified Payroll Professional (CPP) license.