Hauser insurance offers information concerning the role of tax liability within business transactions. In addition, the company is involved in providing risk management, insurance, and employee benefits to all companies regardless of their size. Hauser insurance company is keen on identifying the organization’s needs, providing solutions and products to help a company acquire a merger, transaction execution, or acquisition.
The purpose of tax liability insurance as explained by Hauser Insurance
Tax liability functions the same as a warranty. However, RWI insurance and tax liability differ when it comes to known and unknown tax exposure. An RWI insurance policy excludes coverage of all known risks. Therefore, the known risks included in the schedules supporting the purchase agreement.
- Replacement function
A tax liability insurance can help offset the need for a seller’s indemnity. Additionally, it helps in a purchase price adjustment. How it works is that the buyer may be required to pay the contractual agreement concerning a known tax liability for the insurance retention amount.
- Issuance of a delayed compensation
Here, a company offers indemnification of compensation to recipients concerning excise taxes in Section 409A. The kind of coverage is helpful in the case of an audit. The tax liability works by having to backstop the issuer’s cover to the compensation recipients.
- Tactical Pre-transaction purchase
Sellers who anticipate an acquisition or a merger obtain a tax liability. It offers the buyers a competitive bidding environment because of the known perils before actualizing the merger or acquisition intended.
Additional M&A Transaction Usage
The RWI insurance usage is to facilitate mergers and acquisitions. In instances where the RWI is not available, obligation insurance provides another method of buyer protection concerning known tax matters.
- Policy application
When mergers and acquisitions are not involved, the tax liability insurance application is in internal tax structures. In addition, tax liability insurance is vital in other tax indemnity transactions.