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What Happens If I Miss a Sales Tax Deadline?

  • Jun 22, 2016 | Jessica Sillers

Forgetting to wish your second cousin a happy birthday on Facebook isn’t a huge mistake. Neither is forgetting to attach a file and having to send a second email two minutes later (Subject line: Oops!). But forgetting to file sales tax can do major damage to your business.

I’m Late for a Very Important Date

Generally speaking, not filing a sales tax return is bad news across the board. Expect a late fee, interest on the amount you owe (that might compound daily, like in New York), and penalties based on a percentage of your overdue tax. California will revoke your seller’s permit (and therefore your legal ability to do business there) if you don’t file after a reminder from the Board of Equalization. You can probably guess that if a state gives a credit or discount to timely filers, that offer is no longer on the table.

A penalty charge and a stern letter are only the beginning, though. Ignoring deadlines or letting a missing return get more and more delinquent can land you and your business in serious trouble.

How Much Trouble Are We Talking About?

It depends on how late you are, and which state you owe. States like Texas and Tennessee start with a penalty and a 5 percent charge on your overdue amount. That fee can climb to 25 percent as you wait longer to file your return.

The worst-case scenario is if you go so long without filing that a state government suspects you of committing tax evasion. As well as incurring more civil penalties, a report to the Office of the Attorney General and an investigation can subject you to criminal prosecution. You could end up serving a jail sentence for fraud.

The best way to prevent this from happening is, of course, to file on time! If you miss a deadline, file your return as soon as possible. Maryland notes that they may have to assess your business for fraud penalties once they escalate to an investigation. Don’t force a state government’s hand. Visit their Department of Revenue or other relevant website for guidelines on how to file, or contact them directly if you’re still not sure what to do.

How Do I Make Sure I Meet Deadlines?

First, check your nexus. Sellers can inadvertently miss a filing deadline if they didn’t realize a particular state was expecting a sales tax return. Be especially careful if you work with online affiliates, store inventory at fulfillment centers, or engage in other business activities that can create unexpected nexus.

Second, note each state’s deadlines. If you thought you had until the 20th of the month to submit your Maine sales tax return, you could end up being five days late.

Finally, remember to file even if you don’t owe any sales tax that period. States use tax returns to keep their records organized, so they want an update even if it doesn’t come with revenue. New York imposes a $50 penalty on businesses that don’t submit a return that shows no tax due.

As you can see, meeting your sales tax filing deadlines is very important to keep business running smoothly. Keeping your nexus records up-to-date and your calendar organized will save you a lot of money and headaches.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Jessica Sillers
Avalara Author Jessica Sillers