Does an acquired company have to charge a state tax when bought out?

Question

With alot of acquisition going on as part of an expansion plan by big companies, I would like to know if the state tax would be added as you would when you go buy groceries and stuff.

If so, how does this work if company from TX want to acquire company from CA?

Answer 1

Generally no, for a couple of reasons:

1) most large acquisitions are acquisitions of equity interests (stock, partnership interest etc.). So the assets themselves are not being sold, just the equity in the company.

2) for those acquisitions that are asset acquisitions, most of the property being purchased is not subject to sales tax or, if it is, it is being purchased for resale and thus exempt from sales taxes.

There may be other taxes like transfer taxes for titled vehicles and so on.

Answer 2

never

as the property still belongs to the company