How a taxpayer may obtain a sales tax refund or credit
sales tax refund or credit
The steps for claiming a sales tax refund or credit vary by state, but the most common procedures include adjusting the sales reported or tax due on the following return; amending the original return; or filing a separate refund claim either by letter or by a specific form.
Traditionally, consumers were required to request sales tax refunds through the vendor they made the original purchase through. The vendor was then obliged to file a refund claim with the state on behalf of the customer. This method protected the state from duplicate refunds.
Today, with the growing popularity of reverse audits and sales and use tax recovery specialists, many vendors complained that filing refunds claims on behalf of the customer was overly time consuming. In response, many states have adopted procedures for the vendor to assign the right to receive the refund to the customer which, once awarded, allows the consumer to deal directly with the state in obtaining a refund of the sales taxes paid in error. Before filing a refund claim with a vendor, taxpayers should check with the state to determine if an assignment is feasible.
Source: CCH “Sales and Use Tax Answer Book” (2014)
Lucinda Rowlands has been the general manager at Zip2Tax since 2010. She has extensively researched sales and use tax regulations in order to help small businesses navigate complicated tax rules.