Getting Your Buyer Clear of Your Florida Taxes

Why your old tax bill becomes the buyer's problem

Under Florida law, a buyer that acquires more than half of a business, its assets or its stock of goods can be held liable for the seller's unpaid Florida taxes from that business.

The idea is simple. The state does not want an owner to sell everything, keep the cash and leave a tax bill behind with no one to collect from. So the claim can follow the business to its new owner.

The exposure is not small. It can reach up to the greater of the purchase price or the fair market value of what was bought. A careful buyer, and any lender behind them, will not ignore that.

In a sale of shares, the company itself keeps its tax accounts and whatever history comes with them, so buyers also cover that risk in due diligence and the purchase agreement.

The certificate that protects the buyer

The buyer is protected if you provide a receipt or Certificate of Compliance from the Department of Revenue. It shows your returns were filed, the tax was paid and there is no notice of intent to audit.

That protection assumes the buyer and seller do not share insiders. A buyer is also protected if the Department audits the business and finds nothing owed, but few deals wait for an audit.

So the certificate is the practical route. You request it online through the Department of Revenue, using the Request for Tax Clearance Letter or Certificate of Compliance. Fax and mail requests are also accepted.

• The person asking must be listed for the company on Sunbiz, or have a power of attorney on file.
• Standard processing takes about 7 to 10 business days.
• Any missing return or unpaid balance will hold it up, so clean those up first.

How the holdback or escrow usually works

Because the certificate often is not in hand at closing, buyers commonly hold back part of the price until it arrives. The money sits with the closing attorney or an escrow agent, not in the buyer's operating account.

The purchase agreement should say how much is held, who holds it, and exactly what releases it. "Delivery of a Certificate of Compliance covering all periods through closing" is the kind of trigger you want.

Push for a release tied to a document you can control, with a deadline. A vague promise to release funds "once tax matters are resolved" can leave your money parked far longer than it needs to be.

The holdback is separate from other deal terms, such as a seller note or an earnout. Keep them apart in the agreement so a dispute over one does not freeze the other.

Your final return comes due 15 days after closing

When you sell or close the business, Florida requires a final sales tax return and payment of all tax due within 15 days after the sale or closing. It covers the period from your last return through the closing date.

You also notify the Department of Revenue that the account is closing. Until that final return is filed and paid, a clean certificate covering the last stretch of your ownership is hard to get.

If you have employees, the reemployment tax account needs its own final report. We cover that on our page about the reemployment tax account after a sale.

What the certificate does not do

A Certificate of Compliance reflects one point in time. If months pass between the request and your closing, expect the buyer to ask for a fresh one dated closer to the deal.

It also does not stop the Department of Revenue from auditing periods before the sale later on. If an audit finds tax you owed, that bill is still yours to deal with, even with the buyer protected.

That is why good records matter after you sell. Keep your sales tax returns, exemption paperwork and closing file somewhere you can find them for several years.

Timing the request around your closing date

Closing dates slip often. Requesting the certificate too early risks a stale document, and too late risks a longer holdback. About two weeks before the target date usually balances both.

Before you request it, check that every return is filed, including any zero returns for slow months. One missing filing is the most common reason a clearance request stalls.

The sales tax treatment of the assets themselves is its own topic, covered in Florida sales tax on the assets you sell. The broader closing timeline is on our approach.

Your CPA or closing attorney should confirm the holdback terms and which accounts need clearance for your specific company.

If you are early in the process and want a sense of value first, ask for a private value range or call (904) 555-0129.