Six common sales tax filing mistakes to avoid

by TaxJar January 30, 2024

Please note: This blog was originally published in 2021. It’s since been updated for accuracy and comprehensiveness.

Whether your e-commerce business files taxes monthly or quarterly, it’s easy to get tripped up remitting money to a state. To help you understand and avoid some of the pitfalls we’ve learned from talking to e-commerce businesses, we’ve outlined some of the most common mistakes companies make when filing sales tax returns. Read on to learn how you can avoid these common mistakes when it’s time to file and pay sales tax.

Top six sales tax filing mistakes

1.) Filing late – We get it. Filing sales tax is painful, but what’s more painful is putting it off. You still have to file (eventually) and you’ll be hit with penalties and late fees.

2.) Not filing a return at all – What’s the least that can happen if you fail to file a return? Even if you don’t owe any sales tax, you may be on the hook for a penalty (Florida’s is $50) or get your sales tax permit revoked. Worst case scenario, you’re on the hook for criminal charges. (Don’t panic — All states are different, but this usually occurs either when you’ve either a.) avoided ever filing for a sales tax permit and collecting and get caught b.) collect sales tax from your buyers without a sales tax permit.)

3.) Incorrectly reporting tax collected – In an ideal world, sales tax reporting is easy. You tally up everything you’ve collected from a state and send that money in. But here in the real world, states have other ideas. Most want you to break down how much sales tax you’ve collected based on county, city or other special taxing district. And if you sell on multiple channels, combining your sales tax reports can be challenging.

4.) Tripping up on taxable periods – If you have sales tax nexus in multiple states, you’ve probably run into this: some states want you to file annually, some want you to file quarterly, and others want you to file monthly. It can be very easy to confuse the dates of a taxable period and file the incorrect amount of sales tax. Especially since many states’ definitions of a “taxable period” are a little bit different. Be sure you’re only filing the amount of sales tax you collected from customers during the right taxable period. TaxJar takes care of that for you, too.

5.) Forgetting to include necessary information – Wouldn’t it be nice if every state’s sales tax filing form was well… uniform? Sadly, that’s not the case. Sales tax filings can be rejected just for leaving off easy-to-forget information – like your signature.

6.) Computation errors – Math defeats even the best of us, and sales tax forms don’t make it simple. Take California, for instance. California sales tax filings require that you round amounts up and down until it feels almost impossible to make your numbers match what they want to see. Be wary of computation errors.

Let TaxJar handle sales tax filings for you

At TaxJar, we help more than 20,000 sellers manage their sales tax needs every month. We can help your business save time and avoid errors with our automated filing service called AutoFile. Read more about how AutoFile can handle all of your returns in as many states as you’d like.

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