late sales tax return
State governments have a strict schedule for when sales tax returns need to be sent in. They expect your return and taxes to be submitted on time. In the course of running your business thought it’s understandable if you lose track of time and end up late on your sales tax return. This isn’t an ideal situation but is one that you can handle without too much trouble if you take action right away.
When is a sales tax return late?
The number of times you need to file a sales tax return per year depends on the amount you collect in sales taxes and your state’s rules. Generally, states require annual, quarterly, or monthly returns. The more your business collects in sales taxes, the more frequently you need to submit a return with the taxes.
Your state government should notify you when payments are due depending on your filing frequency, but don’t expect them to. Make sure you keep track on your own calendar as well. Your sales tax return should be submitted either by mail or electronically by this date. If you file by mail, government officials typically look at the postage date of your return to determine whether it was on time so if it takes a few days for the mail to arrive, you won’t have an issue. However, if you miss your sales tax return deadline, even by a day, your return will be considered late and may be subject to fines and penalties.
Can I request an extension if I’m late?
State governments generally don’t offer extensions for late sales tax returns. One exception is when there has been a natural disaster in your area. The person in charge of your state’s department of revenue, usually the state comptroller, has to specifically grant a sales tax extension to businesses in your area. Otherwise, don’t expect the deadline for your sales tax return to change.
What happens if my sales tax return is late?
A late sales tax return can lead to a few different problems. The state government might charge a flat late filing penalty regardless of how many days you are late. You could need to pay this penalty even if you don’t need to submit any sales taxes for the period. The government could also charge a penalty on your unpaid sales taxes. This will be based on the total amount you haven’t submitted and the number of days you are late.
For example, in Texas if you are late on your sales tax return, you need to pay a $50 late filing penalty. From there, the government charges an extra 5% penalty on your unpaid sales taxes if you are less than 30 days late and an extra 10% penalty on your unpaid sales taxes if you are more than 30 days late.
If you don’t pay the taxes and penalties in a timely manner, the government could take more severe legal action like placing a lien against your property.
What should I do if my sales tax return is late?
The best strategy is to file your sales tax return and taxes as soon as possible. This way you’ll minimize the penalties you’ll owe for a late return. It would be a good idea to contact the agency in charge of sales taxes in your state and ask for their recommendation on the best way to submit your late return. They may ask you to pay online so everything is processed more quickly. If you can’t pay all your unpaid taxes, it likely makes sense to file and pay what you can as this would reduce what you’d owe in penalties.
Occasionally a state may offer a limited time sales tax amnesty on fines and penalties. These are rare, but it’s worth asking if amnesty is available.
If you find your business is substantially in arrears, you should seek the services of a qualified tax attorney with familiarity with that state. They can sometimes negotiate a settlement and undoubtedly save you a great deal of personal time.
If you have a late sales tax return, the sooner you can address the problem the better. Keep this information in mind so you can minimize the financial loss of your late return and use it as motivation to file on time in the future.
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.