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What to do if you miss your sales tax deadline

  • Jun 29, 2017 | Stephanie Faris

You wake up in the middle of the night, suddenly aware that it’s July 31st and your business’s sales tax payment is now overdue. Unless you’ve filed late in the past, your first instinct may be to panic, sure that the full weight of the law will soon come down on you and your business.

If you find yourself in this situation, there’s no reason to panic. You won’t go to prison or deal with hundreds of thousands of dollars in fines over a payment that’s a few days late. In fact, you may find the punishment for missing the deadline is minimal. Here are a few steps to take as soon as you realize your sales tax payment is late.

File your return

The sooner you pay the taxes due, the better. Your penalties will compound over time, so by paying sooner you’ll be able to stop them from adding up. In Texas, for instance, penalties are 5 percent if you pay within 30 days of the due date, but they go up to 10 percent after 30 days. The State of Missouri uses a calculation that multiplies the number of days late by the annual percentage rate, so each day matters.

Your payment may be late because you can’t afford the sales tax you owe. If that’s the case, delaying won’t help. Check with your local taxing authority on your options. Simply filing the return may reduce your penalties. You may be able to work out a payment plan that will reduce the amount you’ll owe over time. At the very least, contact your local taxing authority to discuss the best options for your situation.

Set up reminders for future payments

Consistently paying your sales tax late could create problems for your business. There could come a day when you don’t have the money to pay the taxes due, and a solid past payment history will make state authorities more inclined to work with you if you ever need to set up installment payments.

Use technology to set up reminders to keep you from forgetting. You’re either required to pay monthly, quarterly or annually, depending on the amount of taxes you submitted the previous period, with due dates usually falling on the 20th of the month in which it’s due. Pay close attention to the amount you’re collecting to make sure you know when your payment schedule changes. If your business grows and your sales tax collections cross a threshold, you may have pay monthly instead of quarterly or annually.

Don't feel bad if you miss a sales tax filing deadline. Business owners typically have so many other things going on, it can be easy to let things fall through the cracks. Your local Department of Revenue may allow you to set up Reminder to File emails, which you can then mark as important or forward to a team member to handle. If you aren’t currently getting these emails, contact your regulatory authority to see if the option is available.

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
Stephanie Faris
Avalara Author Stephanie Faris