How to pay your sales taxes

pay your sales taxes

pay your sales taxes

After you’ve diligently collected sales taxes from your customers, you need to then transfer that money to the government. This is generally a straightforward process as the government wants to make it easy for you to send over its revenue. However, there are a few points that you need to watch out for when you pay your sales taxes.

pay your sales taxes

Most states accept sales tax payments via check, electronic fund transfer, and sometimes even credit card.

Ways to pay

Your options for paying the collected sales taxes will depend on your state. It is common for state governments to accept payment by check, money order, or an electric fund transfer from your bank account. Depending on how much you collect in sales taxes, the government may request a specific form of payment. For example, in Texas if a business paid more than $100,000 in sales and use taxes the previous year, the business owner will only be able to pay sales taxes by an EFT. Some states also give business owners the option to pay by credit card but this can run into problems with the credit card company.

Trouble with corporate credit cards

If you’re planning on paying your sales tax bill with a company credit card, you need to make sure that the payment will go through. Just because your state government accepts payment from a credit card doesn’t mean your credit card company will accept the transaction. Zip2tax has found that some company credit cards block purchases related to sales taxes. Business owners should be able to get this block lifted from their corporate cards, but they need to call customer service and request this change first. If you don’t plan ahead, the mix-up with your credit card could cause your payment to be late.

Dealing with late payment

If you are late on submitting your sales tax return and taxes, you’ll likely owe extra money in penalties and interest. These extra costs will be added to the balance that you need to submit to the government. After you’ve determined how much extra money you need to submit, you should just pay the entire balance as normal; you don’t need to make separate payments for the sales taxes and the penalties.

Benefit of early payment

If you have some extra cash on-hand, you could get a discount on your taxes by paying your sales taxes early. States that offer this option require that you estimate how much you’ll owe for the upcoming period and your estimate needs to be fairly accurate for the discount to apply. For example, in Texas your paid estimate needs to cover at least 90 percent of the taxes you end up actually owing. If you qualify for this discount, Texas will deduct 1.25 percent off your sales tax bill which leaves more money behind for your business.

Handling the payment of your sales taxes should be one of the easier parts of the taxation process. Keep this advice in mind so you don’t make this transaction any more frustrating than it needs to be.

How to deal with a late sales tax return

late sales tax return

late sales tax return

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.

How to file a sales tax return

file a sales tax return

file a sales tax return

As a business owner, it is your responsibility to collect sales taxes from your customers and submit the money to the appropriate state(s) along with a sales tax return. To avoid audit problems and penalties, you need to make sure you file your return according to each state’s rules and filing schedule. While each state has a slightly different process, here are some general guidelines that can give you an idea of what to expect. file a sales tax return

Filing frequency

Every state has different rules for when and how often you need to file your sales tax returns. It is common to see an annual, quarterly, or monthly filing frequency. Generally, the more money your business collects in revenues, the more often you have to file a sales tax return.

For example, in New York there are three filing periods: annually, quarterly, and monthly. Businesses that owe less than $3,000 a year in sales taxes can file annually during the period of March 1st through February 28th, February 29th on leap years. Businesses that make less than $300,000 of sales that are subject to sales taxes need to file quarterly whereas a business that has more than $500,000 in annual sales taxable revenues needs to file monthly. Even if you don’t owe any sales taxes for a given period, you still need to file your return.

E-filing

Most states allow business owners to submit their sales tax returns electronically. This is actually a requirement in many states to save time and money. There are a few exceptions when a business needs to file a paper return. For example, in California you can’t e-file if you are submitting an amended return, if your business is registered to a permanent location but you are making sales from another temporary location, or if you are reporting on a schedule other than Schedule A, B,C, E, or G. The vast majority of business owners will e-file though.

Late filing penalties

If you don’t file your sales tax return on time, you may owe extra money as a penalty. Some states don’t charge a penalty if you are late with your return, but you don’t owe any money in sales taxes. However, if you do owe taxes, the state will penalize your late return.

For example, if you are late with your sales tax return in North Carolina, the state will charge an extra 5% per month up to a maximum 25% as a failure to file penalty as well as another 10% as a failure to pay penalty. In addition, the state will charge interest on your unpaid balance.

Since each state has its own unique process, it is always a good idea to review your state’s sales tax filing process with a tax professional to make sure your business is in compliance. This way, you can avoid costly filing mistakes.

Texas sales tax seminar schedule announced

sales tax seminar

sales tax seminar

Texas sales taxThe Texas Comptroller’s office has announced sales and use tax seminars scheduled for January and February 2013. In addition to the scheduled seminars, the comptroller’s office can set up special seminars for organizations upon request. To find the comptroller’s office in your area, go to http://window.state.tx.us/taxinfo/fieldoff.html.

Texas sales and use tax seminars are offered in both english and spanish (varies by location). The seminars are free and no registration is required. Attendees set the pace, so be prepared with all of your questions regarding rules, updates, forms and procedures.

Go to tax.help@cpa.state.tx.us for more information, or call 1-800-252-5555.

Minnesota spray tan tax free!

spray tan tax free

Minnesota spray tan tax free!

 spray tan tax free, no more pastie white!Good news everyone!

The Minnesota Department of Revenue has confirmed that spray tanning is NOT taxable. Yes, you heard me right, spray tan tax free! So don’t hesitate to run right out there and turn your pastie white complexion a bright, healthy looking orange!

One less thing to worry about as you dig your patio set out of the 3 foot snowdrift.

Oh, yes, and they also clarified the taxability status of several dozen other goods and services in a series of updated fact sheets. Learn more at the Minnesota Revenue web site.

The dept. of revenue also wants to remind everyone that the 2012 annual sales and use tax return deadline is Feb. 5, 2013. All returns need to be filed electronically using the e-Services system or by phone at 800-570-3329.

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