Small business FAQ > Sales and use tax returns 101

Sales and use tax returns 101

Small business FAQ > Sales and use tax returns 101

Sales and use tax returns 101

One of the most important parts of collecting and remitting sales tax is filing your sales tax return with the relevant state. If you’re registered for sales tax with a state then you’re required to submit a return for the sales and use tax you’ve collected and remitted, even if that amount is $0.

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

Understanding sales and use tax returns

A sales and use tax return is a return that’s used to report on the sales and use taxes collected and remitted by your business to the government.

Yes. Every business with a sales tax license is required to submit a sales tax return, even if your business’s sales for the filing period were $0.

A $0 return, also known as a zero return, is a sales and use tax return that tells the government that you had no sales or limited sales.

Sales tax filing is the act of filing sales tax returns and reporting the taxes you’ve collected to the relevant government authority. Remittance is the actual act of paying the collected taxes to the government.

Maybe. If you’ve triggered economic nexus in any of the states where you sell online, then you need to register to collect and remit sales tax and file a return. Our sales tax guide for online sellers can help keep you informed on what you need to do to stay in compliance.

Following sales tax return schedules

How often your business needs to file sales tax returns is determined by the state. The frequency is often based on how much you make in taxable sales and can be monthly, quarterly, semiannually, or annually.

No, each state determines its own filing frequency and due dates for sales and use tax returns. The frequency for your business may depend on your amount of sales.

No. Filing deadlines may vary among different states and depending on your sales volume.

It’s important to file your tax return according to the schedule defined by the state. Not following your established filing schedule could result in potential fines or penalties, not to mention needing to correct your old returns.

Your sales tax return due date depends on the filing frequency and schedule determined by the state. For many states, the due date is the 20th of the month in which the return is due. Deadlines in other states might be earlier or later.

In some cases, such as during the COVID-19 pandemic, you may be able to receive an extension for the filing date on your sales tax return. Please check with your state to learn the extension options available for your business.

Not really. The state will determine when your sales tax return is due. The due date is often 20 days after the end of the previous tax period. You can get your returns in any time during those 20 days, but you should avoid late payments as they could result in fines and penalties.

No, your filing frequency is determined by the state based on your sales volume.

Filing sales tax returns

To file your sales tax return, the first step is to gather the forms you need from the revenue department for the state in which you’re filing (you can often find and complete these forms online). Fill out those forms with the numbers from your sales, and make sure you submit before your due date. 

You’ll need to file your sales tax return for each state where you've triggered nexus. That could mean filing a few or even dozens of sales tax returns. Avalara can help you take back your time with automated sales tax return preparation and filing.

Your sales tax return must be filed with the relevant governing authority (often a state revenue department) where the sales tax was collected. In many cases, this can be completed on the state’s revenue department website.

Unless your business is a single-member limited liability company (LLC) or sole proprietorship, you must file separate state and federal tax returns for your business. You must also submit different returns to each state where you’re obligated to collect and remit sales tax.

If you file your sales tax return late then you’ll likely have to pay a penalty. Penalties could be significant and may cost up to 5% per month up to a maximum of 25% plus a failure to pay penalty of 10%. The penalty may be different depending on the state, but it’s not something you want to learn the hard way.

If you make a mistake on your sales tax return, like filing the wrong amount, you can correct it by filing an amended return. Contact the department of revenue for the state in question. There’s usually a deadline for amended returns (such as within three years of the original due date).

Visit the revenue department site for the state where you need to file. Here, you can find the necessary forms, fill them out, and submit them online.

You can find the sales tax return forms you need on the revenue department website of the state where you need to file.

Simplifying sales tax returns

While necessary, completing and filing sales tax returns can also take a lot of time. That’s time that could be better used running your business.

Avalara Returns for Small Business helps save time and money by automating the sales tax return process. Learn how Returns for Small Business can help you simplify your sales tax returns.

Sales tax rates and how they’re applied are changing all the time. This can make charging the correct tax tricky, especially when different rates for cities, counties, and other jurisdictions are involved.

Avalara can help you improve the accuracy of your sales tax returns with more up-to-date rates and rules so that you can be confident you're charging and collecting the right amount of tax.

Yes. Avalara Managed Returns and Avalara Managed Returns Premium are built for businesses dealing with a larger volume of sales tax returns. Learn how Avalara can help you handle your returns with notice management, multilocation returns, tax forms for local jurisdictions, and more. We can even help with Canadian returns. Learn more about sales tax return products from Avalara and how they can help your business.

Connect with Avalara for the answers you need to do tax compliance right.

Connect with Avalara for the answers you need to do tax compliance right.