Case Study
Protecting a Family-Owned Business from $2M in Multi-State Exposure During Sale
Company T
A multi-generational, family-owned manufacturer and lessor of commercial equipment operating nationwide.
The Challenge
After decades of successful operation, Company T was preparing for sale.
During due diligence, the buyer identified potential multi-state sales tax exposure tied to both equipment sales and leasing activity. While the company had properly collected and remitted tax in its home state, it had not fully evaluated the impact of economic nexus laws in other jurisdictions.
In some cases, tax had been charged incorrectly based on origin rather than destination rules.
In others, tax had not been collected at all.
The leasing component introduced additional complexity, as states treat recurring lease payments differently from outright sales.
What had long felt like a localized compliance issue suddenly became a national, transaction-level risk.
The buyer estimated potential exposure exceeding $2 million across more than 20 states — jeopardizing deal terms and threatening the value of the family’s exit.
The numbers were there.
But the rules behind those numbers required interpretation.
The Solution
Company T’s M&A consultant referred them to Miles Consulting Group to bring clarity and structure to the exposure.
Our team conducted a comprehensive nexus and taxability review, analyzing:
- Economic nexus thresholds state by state
- Distinctions between sales and lease treatment
- Destination-based sourcing requirements
- Registration and filing gaps
- Lookback periods and penalty exposure
Rather than accepting the initial exposure estimate at face value, we evaluated where liability truly existed — and where it did not.
Working closely with the company’s CFO, we:
- Entered into voluntary disclosure agreements to reduce lookback periods
- Negotiated penalty abatements
- Contacted customers to determine whether tax had already been self-assessed
- Structured remediation across more than 20 jurisdictions
- Brought the company into full compliance prior to closing
Multi-state tax exposure is rarely solved by calculation alone. It requires judgment — understanding how rules intersect, how states interpret leasing structures, and how to negotiate defensible resolutions.
The Outcome
Through coordinated remediation and strategic negotiation:
The initial $2M exposure was reduced by approximately $1 million
Penalties and lookback periods were significantly limited
Compliance was achieved across all required jurisdictions
The transaction closed successfully
Most importantly, the family was able to complete the sale with clarity and confidence — not lingering uncertainty.
After closing, MCG assisted in winding down remaining state accounts and ensuring a clean exit.
Client Perspective
“Expertise. Organized. Approachable.”
“I talked to several firms when deciding who to hire. From my very first conversation with Monika and her team, what struck me was how friendly and approachable they were. I was out of my comfort zone and knew I had a very large problem on my hands.
I needed a team of experts — but also people I could talk to, ask questions, and trust to look out for my best interest. Having 27 states to tackle, the team was incredibly organized and communicated with me every step of the way.
Not only were they true professionals in every interaction, but I felt like I was working alongside friends. They truly cared about helping me resolve my issues.”
