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Considerations relevant to sale/purchase of alcohol-related business

On Behalf of | Mar 29, 2017 | Business Formation & Planning |

Most readers of our New Haven business and commercial legal blog at Berdon, Young & Margolis, PC, likely know intuitively — if not from personal experience — that some quite singular variables exist relevant to the purchase/sale of any Connecticut business that sells alcohol.

A few commercial products in the American market mainstream command heightened scrutiny from regulators, especially when it comes to sales and what government officials figure is their fair take in sales-related tax revenues.

Many readers might think immediately of tobacco products. For some, firearms might come to mind.

And, of course, tax-derived revenue comes immediately to the fore in any context involving the sale of alcoholic beverages to the public.

As such, it is a flat given that government regulators will pay closest scrutiny in every instance where a seller of such a business has identified a buyer and intends to transfer interests.

As we note in an article authored by attorney Peter A. Berdon on our website, there are many hoops and hurdles to clear for both would-be sellers and buyers of a Connecticut business that sells alcohol.

And for one very simple reason: State officials want to ensure that they receive the full amount of beverage-related sales taxes due pursuant to any ownership transfer.

And, ultimately, they don’t really care whether they get them from the buyer or seller, respectively — so long as they’re paid.

Under Connecticut law, a buyer must request a “Tax Clearance Letter” from the state Department of Revenue Services, which, as we note in the above-cited article, “will automatically trigger a sales tax audit for the seller.” Ultimately, the goal for any purchaser is to receive a post-audit clearance from the state, which breeds confidence in going forward knowing that tax liabilities do not exist.

If they do, unpaid sales taxes can be demanded of the purchaser.

There are obviously many things to think about in the sale of a business involving alcohol — including audit preparation, timing considerations, contract drafting and more — for both sellers and buyers.

An attorney commanding a singular professional background in representing diverse industry clients across the full spectrum of liquor licensing, sales and regulatory considerations can provide studied counsel geared to obtaining a best-case outcome in any transaction.