Verify case file quality, confirm staff licensing, and protect your investment before closing on an IRS representation or tax debt relief practice.
Find Tax Resolution Firm Acquisition TargetsAcquiring a tax resolution firm offers access to recession-resistant, recurring revenue in a highly fragmented $11B industry. However, buyers face unique risks: contingency-fee revenue tied to multi-year IRS timelines, owner-dependent client relationships, and strict licensing requirements. A disciplined due diligence process across financial, operational, and regulatory dimensions is essential to avoid overpaying or inheriting unresolvable liabilities.
Validate reported earnings by separating retainer income from contingency fees and confirming collectability of active case receivables.
Request trailing 36-month P&L broken down by retainer fees, contingency fees, and installment billing to assess earnings stability and reduce exposure to uncollectable contingency income.
Confirm the firm uses proper accrual accounting for retainer deposits. Misstated deferred revenue can artificially inflate EBITDA and distort the true purchase price multiple.
Verify no single client exceeds 15% of trailing revenue. Flag any large contingency cases that disproportionately skew reported earnings or create binary collection risk post-close.
Assess the quality, stage, and collectability of all active IRS and state tax resolution cases before attributing value to the pipeline.
Obtain a full case summary report listing each active matter, resolution stage, estimated fees, IRS program type (OIC, installment, CNC), and expected close timeline.
Request historical case outcome data including acceptance rates on Offers in Compromise and installment agreements. Low resolution rates signal operational or staff quality issues.
For contingency cases, estimate realistic collection scenarios under bear, base, and bull outcomes. Apply a haircut to pipeline value for cases in early IRS negotiation stages.
Confirm firm-level compliance, validate staff credentials, and assess operational systems that reduce owner dependency.
Confirm all practitioners handling IRS representation hold valid EA, CPA, or JD credentials in good standing. Request IRS CAF number documentation for each licensed staff member.
Pull the firm's own IRS transcripts and confirm no outstanding tax liabilities, FTC complaints, state AG actions, or bar grievances related to fee practices or advertising claims.
Evaluate documented workflows for client intake, IRS correspondence, fee billing, and case handoff. Well-documented SOPs reduce founder dependency and support post-acquisition continuity.
Verify the Tax Resolution Firm acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Tax Resolution Firm meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Tax Resolution Firm must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Most tax resolution firms sell at 2.5x–4.5x EBITDA. Firms with high retainer revenue, documented SOPs, and licensed staff teams command the upper end of that range.
Yes. Tax resolution firms are SBA-eligible. Most SBA-financed deals include a seller note and a 12–18 month consulting agreement to support client and staff retention during transition.
Apply a probability-weighted haircut based on case stage and IRS program type. Early-stage OIC cases carry more uncertainty than active installment agreements nearing resolution.
Owner dependency is the top risk. If the founder personally manages all IRS relationships and negotiations, client attrition post-close can materially erode the value you paid for.
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