Do you have or operate a business which needs to get registered for sales tax? If so, you are probably wondering about filing requirements, filing frequencies and due dates. It's important to realize that sales tax filing and remitting requirements can vary by state. The frequency can be monthly, quarterly, semi-annual, or annual. Additionally, some states may require a prepayment or estimated payment before the due date for the return. This post by Andrew Peterson CPA, my associate, covers some filing frequency basics:
Initial Due Date Frequency: When you register with a state you will have a frequency assigned. Some states use the same frequency for every company and then adjust after a year based on sales or tax volume. Others request an estimate of sales and will assign a frequency based on the provided estimate. This will then be adjusted based on actual volume.
Filing Frequency Examples: Utah has monthly, quarterly and annual reporting periods. If the liability is $50,000 or more you file monthly, if the liability is between $1,000 and $50,000 you file and pay quarterly, and if the liability is under $1,000 you file annually. Utah allows you to make an initial estimate and then updates filing frequency on an annual basis. Other states are not as generous as Utah. For example in North Carolina if your monthly tax liability is greater than $50 than you are a monthly filer and if less than $50 you are a quaterly filer.
How to File and Pay: The filing methods can vary by state. Some states require that you file online, while others still accept paper returns. When it comes time to pay the tax due you may have several options. Be sure to read the details of each option as there may be fees associated with some payment types and not others.
Temporary/Special Event License: Some states offer temporary/special event licenses which cover a short period where sales are not going to be ongoing. This provides the benefit of not needing to file zero balance returns on an ongoing basis. We will go into more depth on occasional sales and when one of these types of licenses can be used in a future post.
Option to File More Frequently: Some jurisdictions may permit you to file more frequently and may reward you for doing so. Some sellers prefer to collect more frequency as they find it easier to budget cash flows with more frequent smaller payments.
Continuing to use Utah as an example, if you file and pay on time on the monthly basis you will get to keep 1.31% of the tax collected. This is not available for quarterly or annual filers of the tax. Please remember that not every jurisdiction has incentives for more frequent filing. You also need to compare the costs and benefits of more frequent filing. If you only collect $900 in sales tax in a year, is it worth filing 11 more returns to save $11.79? How much would you have to pay to file those returns, or how much time would you spend?
For state specific examples please contact Peisner Johnson, per instructions below.
Other recent “Sales Tax Basics” posts by Michael J. Fleming:
- Sales Tax Filing Basics
- Taxability: Sales Tax HotSpot #2
- States with No Sales Tax
- Nexus: Sales Tax HotSpot #1 and Key Sales Tax Consideration
- New Sales Tax “Basics” Blog: 5 Hotspots You Need to Understand