All posts by David Grethel

Mergers and acquisitions (M&A) can unlock growth opportunities—but they also bring complex employment tax challenges. Missteps in handling state unemployment insurance (SUI), succession status, and taxable wage carryovers can lead to costly penalties and compliance headaches. The good news? With proactive planning and clear processes, you can minimize risk and maximize tax benefits. Below are 15 practical tips for managing employment tax during M&A transactions. These guidelines are not a substitute for legal or tax advice. Before the Deal Closes 1. Gather Historical Data Best practices is to secure at least three years of wage and tax records, filings, and SUI rate notices for the target company. Obtain signed releases from target company officers to access agency records. 2. Confirm Deal Structure Is it a stock or asset transaction? If asset-based, is it partial or total? Will any officers transition to the new entity? 3. Lock Down Key Dates Document the transaction date and any employee migration dates. If employment continuity is broken, note the gap between last payroll at the target and first payroll at the new entity. Start Strong 4. Perform Succession Analysis Determine if you qualify as a successor employer for federal and state jurisdictions. Rules vary by state. 5. Notify Agencies Early Inform state and local agencies of changes in control, officers, or employing entity promptly. 6. Open New Accounts Establish new accounts (SUI, SIT, local taxes) in alignment with prior reporting. 7. Review SUI Transfer Rules Understand each state’s UI Transfer of Experience requirements and notify agencies immediately after the event. 8. Assess SUI Rate Impact Evaluate how the transfer of experience affects your unemployment insurance rate—up, down, or neutral. 9. Determine Taxable Wage Treatment Confirm if you can carry forward taxable wages from the target company for the current year. 10. Document Everything Send correspondence via certified mail with return receipt. Track all communications and store confirmations. 11. Get Written Confirmation Secure written agency confirmation for key decisions like succession status and transfer of experience. Clean Up Post-Close 12. Close Target Company Accounts Shut down local, state, and federal employment tax accounts promptly to avoid estimated liabilities. 13. Check for Credits Review target company accounts for unused tax credits or prior contributions that may be recoverable. 14. Clear Outstanding Balances Contact agencies to confirm there are no unresolved balances or reporting issues. Finish Strong 15. Follow Up Relentlessly Agency delays are common. Follow up by phone and in writing until all decisions are finalized and confirmed in writing. Bottom Line Employment tax compliance during M&A doesn’t have to be overwhelming. By following these steps—and partnering with experienced advisors—you can reduce risk, avoid penalties, and ensure a smooth transition.

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