Tax Pre-planning is Key with Restaurant Mergers and Acquisitions
What are the tax implications for Restaurants during Mergers and Acquisitions?
In the Restaurant industry, mergers, acquisitions and consolidations occur all of the time. Whether it is acquiring a new company, for example, or the movement of employees from one legal entity to another, doing a thorough review of the tax implications and strategy in advance is necessary and could result in significant tax cost-savings and dollars to a company’s bottom line. Unfortunately, often times this activity seems immaterial to an organization and as a result, the implications are overlooked. The end result of doing nothing could include higher state unemployment insurance tax payments, duplication of tax payments and compliance violations.
Unlike other forms of taxes that employers must pay, the federal-state unemployment tax is one that employers do have control of. As a matter of best practice, Restaurants should first ensure that they employ sound unemployment claims management practices across the organization. However, equally as important is to consider an expert analysis whenever M&A activity is on the horizon to ensure compliance with federal and state rules and regulations regarding the activity and to minimize the tax implications. We have seen significant tax savings and/or refunds for organizations that previously did not even consider reviewing their activity.
Equifax has recently posted a comprehensive white paper on M&A activity for restaurant operators. It can be found here: “Mergers and Acquisitions: The Impact on Unemployment Tax Costs”
If you have further questions about Mergers & Acquisitions and the impacts on unemployment tax costs, please contact us.
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