Glossary · Reading the business
Tax Audit
In short
This is an examination by tax authorities to verify the accuracy of a business's tax returns. It can uncover financial discrepancies or liabilities that impact the deal.
What it means in a deal
A prior tax audit on the seller's business could indicate past financial issues or aggressive accounting practices. During due diligence, review all tax returns and be wary of any red flags that might suggest unreported income or undisclosed liabilities. This helps you assess the true financial health.
Related terms
Common questions about Tax Audit
- What if the business I'm acquiring has pending tax audits or unresolved tax issues?
- What documentation demonstrates a lender's adherence to prudent lending standards during an SBA audit?
- How does the SBA typically review a lender's loan file in the context of a secondary market audit?
- Do unfiled tax returns or overdue taxes prevent SBA approval?
- Are business life insurance premiums generally tax deductible for the company?
- What if a business applicant has outstanding federal tax liens or delinquencies?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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