A certificate issued by most states generally to certify that a taxpayer has filed all tax returns due and paid all taxes and certain other amounts owed as of the date of the certificate. A tax clearance certificate must be requested on a state by state basis. The procedure for and timing of an application for a tax clearance certificate as well as the specific taxes certified varies from state to state. A buyer acquiring a business or assets of a business may request that a seller provide a tax clearance certificate to avoid successor liability for the seller's taxes.

For more information see, Practice Note, Asset Acquisitions: Tax Overview and Standard Document, Asset Purchase Agreement (Pro-Buyer Long Form).