My sales tax return is overdue. Now what?
by May 21, 2024
Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.
It happens to the best of us. We miss a due date and suddenly find ourselves facing an overdue sales tax return.
It doesn’t help that sales tax due dates vary so much from state to state. While most states set the sales tax due date as the 20th of the month after the taxable period ends, other states want you to remit sales tax by the last day of the month, or the 23rd, or the 15th. Just mixing up the sales tax due dates in two states can result in trouble.
So you’ve found yourself in a tight spot with an overdue sales tax return. What’s next?
Evaluate penalties and interest
When you forget to file a sales tax return on time, states generally assess a fine, such as a percentage of the sales tax due up to a certain amount. Since every state makes their own sales tax rules and laws, these penalties vary from state to state.
For example, in Illinois, the penalty for late filing is 2% of tax due, up to a maximum fine of $250 per filing.
And that’s just for failure to file sales tax. States generally also penalize taxpayers for failure to pay sales tax. And those fines can sometimes increase unless you pay the fee quickly.
To use Illinois as an example again, the penalty for failing to pay sales tax is 2% of tax due if paid within 30 days, 10% of tax due if paid after 30 days but within 90 days, 15% of tax due if paid after 90 days but within 180 days and 20% of tax due if paid after 180 days.
Because of this, you likey want to…
File and pay past due sales tax as quickly as possible
This one probably goes without saying, but what if you’re not sure how to file your sales tax returns?
This is where TaxJar can help. When you sign up with TaxJar, we prompt you to connect all of the shopping carts (like Shopify or BigCommerce) and other payment processors (like Stripe or PayPal) you use in your business. From there, we slice and dice your info and create state level sales tax reports just the way the state wants to see them. From there, you can use your TaxJar Reports to manually file your past due sales tax return. See more about how to file your past due sales tax returns with TaxJar here.
TaxJar will also AutoFile your past due sales tax returns. (Keep reading for more about how AutoFile can ensure you never miss another sales tax filing due date.)
Apply for a penalty waiver or abatement
Was missing a sales tax due date a one time thing? If your sales tax account is generally in good standing, the state might take pity on you and waive the penalties and interest accrued due to your past due sales tax filing. (Click here for a list of how to speak directly to a sales tax customer service representative in every state.)
Unable to pay? Many states will work with you, such as helping you pay past due sales tax on an installment plan. (However, they won’t look too kindly on this, considering you were supposed to collect it from customers and turn it straight over to the state once your sales tax filing due date rolls around.)
What to do when facing multiple past due sales tax returns
The only thing worse than one past due sales tax return is lots of past due sales tax returns.
If sales tax simply slipped your mind and you’ve missed a due date here or there, our best advice is still to get current as quickly as possible.
But another common scenario is when businesses get serious about sales tax compliance and realize that they should have been collecting sales tax in a state… but haven’t been.
We wrote about this all-too-common occurrence in our “I’ve unknowingly had economic nexus for years. What do I do now?” blog post.
Let’s say you realize that you’ve had economic nexus in Tennessee since that state passed its economic nexus law on October 1, 2019. In this case, we recommend contacting a sales tax expert ASAP. They can anonymously negotiate with the state on your behalf with what’s known as a voluntary disclosure agreement (VDA).
A word of caution: Past due sales tax is something you want to get a handle on before the state does. States are much less willing to negotiate with you after they have already discovered noncompliance and sent you a notice of fines and penalties.
Never file sales tax late again with TaxJar AutoFile
Whew. That was a hassle. Hopefully you’ve gotten your past due sales tax returns filed and had to pay a minimum in penalties in interest. How about we never do this again, huh?
That’s where TaxJar AutoFile rides in to save the day. With AutoFile, we’ll file your sales tax returns on your behalf. AutoFile is automated, so we never take a vacation or get sick, and we always file your sales tax returns on time, no matter what.
