Filing sales tax is complex or difficult depending on your sales volume and the state in which you are filing
Sales tax filing due dates and frequencies vary from state to state and business to business
To file sales tax, you’ll need to break down in which state, county, city and special taxing jurisdiction you collected sales tax
Be sure to file sales tax on time, every time. States expect to see “zero returns” even if you didn’t collect sales tax over the taxable period
When a merchant registers for a sales tax permit, the state assigns you a filing frequency and sales tax filing due dates. When your sales tax filing due date approaches, you need to do the following:
Figure out your sales tax filing frequency and due date
Figure out how much sales tax you collected in every jurisdiction in every state during that filing period
File your individual state sales tax returns
It sounds simple, right? But due to the fact that all forty-six states (plus Washington DC) that have a sales tax make their own sales tax rules and regulations, this can get complicated fast. Let’s take a look at each step toward filing a sales tax return.
Sales Tax Filing Frequency and Due Dates
When you receive your sales tax license from a state, you’ll also receive your sales tax filing frequencies and due dates.
Sales Tax Filing Frequency
Sales tax filing frequencies are generally based on your business’s sales volume. Filing frequencies are generally monthly, quarterly or annually, but can also be semi-annual. Also keep in mind that not all quarters are created equal. New York’s sales tax filing quarters, for example, fall from March 1 to May 31 and so on.
In most cases, a very small hobby e-commerce business that only makes a few hundred dollars per year has an annual reporting period, meaning they are generally only required to file once per year. But a large business like Wayfair or Amazon is generally required to file sales tax monthly. Some states require very high-volume businesses to file and pay even more frequently in some states.
That said, just because your sales tax filing frequency is quarterly in one state does not mean it will be quarterly in every state in which you are required to file a sales tax return.
Sales Tax Filing Due Dates
In most states, sales tax is due on the 20th day of the month after the filing period ends. So for example, if you are required to file monthly in Colorado, your April 2023 sales tax return would be due on May 20, 2023. Or if you are required to file quarterly in Georgia, your Q1 (January-March) 2023 sales tax return would be due April 20, 2023.
However, not every state adheres to this rule of thumb either. Some states set their sales tax due dates to the last day of the month after the taxable period. But still other states have a different due date, such as the 15th or 23rd.
The trouble here is that it’s very easy to confuse sales tax return due dates between states and accidentally file late in one state.
Reporting Your Sales Tax Collected
Once you’ve confirmed your sales tax filing due dates and frequency, your next step is to determine how much sales tax you collected in each state over that taxable period.
This would be simple if you only had to tell the state a single number such as “I collected $5,097.77 in sales tax in California this quarter.”
But sales tax is rarely that simple.
Most states require that you not only tell them how much sales tax you collected, but they require that you report how much sales tax you collected in each of the state’s taxing jurisdictions.
Why? Because states and local areas use sales tax to pay for budget items like roads or public education. They want to ensure that the right amount of sales tax is allocated to each city, county or other special taxing district so that that jurisdiction gets their due.
For a brick and mortar seller, this is easy. Sales tax is collected at the point of sale, and a brick and mortar retailer stays in one place. But in most cases, an e-commerce business’s point of sale is the buyer’s ship-to address.
That means that even the smallest e-commerce seller may be required to figure out in which city, county, and other special taxing district each of their customers resides. You should have already calculated the right amount of sales tax when making the original transaction. But when it comes time to file your sales tax return, you now have to break that down by state, county, city and other special taxing jurisdiction.
Filing Sales Tax Returns
Once you’ve gathered up your sales tax collection info, your next step is to file sales tax.
Every state allows (and encourages) you to file online, but state sales tax filing websites vary in user experience and complexity.
A handful of state sales tax filings, generally those in states with just one statewide sales tax rate and no local rates, are fairly simple. But most are complicated because they require you to break down sales tax collected by state, county, city and other special taxing jurisdiction.
Didn’t collect any sales tax? Don’t forget to file sales tax anyway. Most states require registered sales taxpayers to file “zero returns” even if you didn’t collect any sales tax during the taxable period.
Unfortunately, failing to file–even when you don’t owe a cent in sales tax–can result in fines.
Penalties for Late Sales Tax Filing and Payment
Speaking of fines, be sure to pay on time.
Filing to file and pay on time can result in penalties and interest.
Penalties generally include a one-time fee for failing to file. But interest begins accruing on the amount of sales tax you failed to remit. If you realize that you’ve failed to file and pay on time, takes steps to get up-to-date as soon as possible, since interest continues to accrue.
Tip: If this is your first time filing or paying late, give the state’s taxing authority a call. Sometimes they’ll forgive first time late filers as long as you’ve gotten your account up to date in a timely manner. (But remember! This generally only works once.)
Failed to file or pay over multiple taxable periods? You might want to consider a Voluntary Disclosure Agreement (VDA).
Sales Tax Discounts
On a brighter note, some states offer a discount to merchants if you file and pay sales tax on time. Basically, they allow you to keep a very small percentage of your sales tax collected if your filing and payment is on time.
Common Questions about Filing Sales Tax
What if you collect sales tax and don’t remit it?
Collecting sales tax without remitting it is the gravest “sales tax sin.” States consider this tax fraud, and failing to remit the sales tax you collected can mean fines or even criminal penalties. Always remit the sales tax you collected.
I only want to pay sales tax once per year. Is that possible?
Unfortunately, states base your sales tax filing frequency on factors such as your gross sales or how much sales tax liability you have in the state. The rule of thumb is that the more sales tax you pay, the more often you are required to pay. Some states publicize this threshold, and you can check with a state to see if their filing frequency info is available on each of our State Sales Tax Guides.
Some states, like Georgia, start taxpayers out paying monthly and then change their filing frequency later. If you feel like you do not collect and remit enough sales tax to pay monthly, we recommend contacting your state and requesting to file less often.