Texas Form 86-114 Before a Business Closing
A Certificate of No Tax Due addresses a buyer risk. It does not erase the seller's unpaid tax obligations.
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What could your next chapter look like?
Austin Business Brokers Office helps sellers prepare for Texas closing questions. If your deal needs Form 86-114, coordinate the request with the buyer and closing team before setting a final payment date.
Bring these records to your advisor
- Seller and buyer legal names and taxpayer information
- Purchase agreement and expected closing date
- Tax account records and outstanding return questions
What the joint request does
The Texas Comptroller uses Form 86-114 for the seller and buyer to request a Certificate of No Tax Due together. Authorized representatives of both parties must sign the request.
The certificate concerns successor tax liability in a business acquisition. It is not the same document as the franchise tax clearance used when terminating an entity.
Why the buyer asks
Without the required protection, a buyer can face liability for unpaid state taxes connected to the acquired business, subject to the applicable limits. That can affect how purchase money is released.
A certificate protects the purchaser for the taxes it addresses. The seller remains responsible for liabilities arising before the sale. Have your CPA reconcile outstanding filings and balances.
Make room in the closing schedule
Confirm which tax accounts and parties the request should cover. Use the exact legal entities in the purchase agreement and identify the closing agent when one is involved.
Ask the closing team how a pending review or balance due changes escrow instructions. Do not assume a signed purchase agreement alone satisfies the tax requirements.
Your closing team and CPA should confirm the current certificate request and how it applies to the purchase agreement.