Sold my HVAC business last November. Escrow closed, wire hit my account, I thought I was done. Now my CPA is asking for a pile of documents from escrow and I'm realizing I never got a clear list. What exactly does the accountant need from escrow to file the final returns? I have the closing statement and the purchase agreement, but apparently that's not enough. Anyone been through this?
Escrow
What paperwork your accountant needs from escrow to file your final returns
Your closing statement is the big one. But they'll probably want the escrow company's full settlement statement, not just the one-page summary. There's usually a detailed version with every line item broken out.
Wait, there's a difference between the summary and the full statement? I just sent my accountant the PDF the escrow officer emailed me. Maybe I should double-check.
Also get the escrow company's EIN and contact info. Your CPA will need it if they have to call and ask Questions, and some states require reporting payments to escrow on the return.
If there were any holdbacks or escrow reserves, you need the release schedule and the final release statement. The IRS wants to know when you actually got the money, not just when the deal closed.
Holdbacks. Yeah, there was a $50k holdback for 6 months. I didn't even think about that being a tax timing issue. So I need the the release letter from escrow when that paid out?
My accountant asked for the wire confirmation and the escrow disbursement schedule. Basically anything that shows money in and money out of the escrow account with dates.
Honestly, just forward your CPA every single email and PDF from the escrow officer. Let them sort it out. That's what I did and my guy was happy. Cost me an extra hour of billable time but whatever.
That's actually not bad advice. The escrow officer usually has a closing package they can send as a zip file. Ask for the 'full closing package' by name. It includes the settlement statement, deed, bill of sale, and the disbursement ledger.
Does the escrow company charge for sending that package again? Mine wanted $75 for a reissue. Felt like a racket.
$75 is cheap compared to what your CPA Will charge to chase it down themselves.
One more thing: if the buyr assumed any liabilities or there was an earnout, get the escrow instructions. That's the document that actually governs how funds move. The purchase agreement doesn't always match what escrow actually did.
And make sure your CPA knows about any 1099-S the escrow might file. Sometimes they file it and sometimes they don't, but it has to reconcile either way.