What happens if I find out after closing that the business owes back taxes the seller never mentioned?

Undisclosed back taxes discovered after closing generally breach a seller representation about tax compliance and outstanding liabilities that most purchase agreements include, supporting an indemnity claim subject to whatever survival period, cap, and basket apply to tax-related representations specifically — some agreements give tax representations a longer survival period than ordinary business ones, given how these liabilities can take time to surface through an audit or reassessment.

Deal structure matters significantly here too. In a share sale, historical tax liabilities generally travel with the corporation regardless of who caused them, which is exactly why the indemnity claim — recovering the shortfall from the seller personally rather than simply absorbing the corporation's own liability — is your main practical protection. In an asset sale, you generally aren't automatically responsible for the seller's pre-closing tax debts unless you expressly assumed them, though certain statutory purchaser obligations can still apply in narrower circumstances. Confirm your deal's structure and the specific tax representation, along with its survival terms, before assessing how strong this claim actually is.