Which states require accelerated sales tax payments?
Numerous states require some form of accelerated or advance sales tax payments for high-volume taxpayers. After all, the sooner sales tax revenue is remitted, the sooner states can use or invest it — and the less likely businesses are to spend it elsewhere.
However, state sales tax filing requirements are also subject to change. In the past few months, both Massachusetts and Mississippi altered certain sales tax payment deadlines.
Massachusetts establishes advance payment requirements
Massachusetts recently announced taxpayers would have 30 days after the close of the tax period to remit sales and use tax, room occupancy tax, meals tax, and marijuana retail taxes for tax periods ending after April 1, 2021. Previously, the taxes were due 20 days after the close of the tax period.
Yet Massachusetts also established new advance payment requirements for taxpayers with more than $150,000 in cumulative tax liability for the immediately preceding calendar year (with some exceptions). This is the first step toward Governor Charlie Baker’s controversial plan to establish real-time sales tax remittance in the Bay State. The next step, if approved, would require all retailers and credit card processors to remit sales tax daily.
Mississippi eliminates accelerated sales tax payments
As of June 2021, Mississippi no longer requires accelerated sales tax payments.
Mississippi taxpayers with an average monthly sales tax liability of at least $50,000 for the preceding calendar year currently must pay, on or before June 25, at least 75% of their estimated June sales or use tax liability for the current calendar year. Alternatively, they can pay at least 75% of their June sales tax liability for the preceding calendar year.
The enactment of House Bill 1139 repeals this provision. Taxpayers with at least $50,000 in sales tax liability for the preceding calendar year are no longer required to make these accelerated annual payments.
Advance sales tax payments are currently required in approximately 17 states, including:
Arizona (PDF): Applies to taxpayers with annual sales tax liability in the preceding calendar year of $1,000,000 or more.
Arkansas: Applies to taxpayers with average net sales of $200,000 or more per month.
Florida: Applies to taxpayers that paid $200,000 or more in state sales and use tax during the most recent fiscal year.
Georgia: Applies to taxpayers with more than $60,000 in state sales tax liability in the preceding calendar year.
Illinois: Applies to taxpayers with an average monthly tax liability of $20,000 or more.
Iowa: Applies to taxpayers with more than $60,000 in sales tax per year (more than $5,000 per month).
Kansas: Applies to taxpayers with at least $40,000.01 in sales tax liability.
Kentucky: Applies to taxpayers whose monthly sales and use tax liability exceeds $10,000.
Michigan: Applies to taxpayers with $720,000 or more of sales or use tax liability in the preceding calendar year.
Minnesota: Applies to taxpayers with a Sales and Use Tax liability exceeding $250,000 in the prior fiscal year (July 1 to June 30).
Missouri: Applies to taxpayers whose average monthly sales tax liability exceeds $15,000 during at least six of the previous 12 months.
New Jersey: Applies to taxpayers who collected more than $30,000 in sales and use tax during the prior calendar year and more than $500 in the first or second month of the calendar year.
New York: Applies to taxpayers whose combined total of taxable receipts, purchases subject to tax, rents, and amusement charges is $300,000 or more in a quarter.
North Carolina: Applies to taxpayers consistently liable for at least $20,000 a month in sales and use taxes.
Ohio: Applies to taxpayers whose liability exceeds $75,000 in any calendar year.
Pennsylvania: Applies to taxpayers with actual tax liability of at least $25,000 for the third quarter of the previous year.
Virginia: Requirements change annually; in 2020, it applied to dealers with at least $10 million in taxable sales. Taxpayers may be able to request a hardship waiver.
Due to the uncertainties brought on by COVID-19, some states may waive prepayment requirements. Others may allow affected businesses more flexibility. When in doubt, check with the state tax authority or a trusted tax preparer or advisor.
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