Sales & Use Tax

Sales Tax Obligations for Businesses

Businesses that sell taxable goods or services are required to collect sales tax from their customers and remit those collections to the state on a regular schedule — typically quarterly, though high-volume businesses may be required to file monthly. Like federal payroll taxes, sales tax collected from customers is considered trust fund money — it belongs to the state and is held by the business only temporarily.

When a business fails to file sales tax returns or remit collected taxes, the consequences escalate quickly. State taxing authorities can assess penalties and interest, revoke the business’s sales tax permit, and in many states, hold responsible individuals personally liable for the unpaid trust fund amounts. The loss of a sales tax permit can effectively shut down a retail business.

Quarterly Return Compliance

Sales tax returns must be filed on time, even if the business cannot pay the full amount due. Failure to file triggers additional penalties and may result in the state estimating sales volume and assessing tax based on that estimate — which is almost always higher than the actual liability. These estimated assessments can be extremely difficult to challenge once they become final.

We assist businesses in filing delinquent sales tax returns, challenging estimated assessments, and establishing payment arrangements with state tax authorities. Bringing a business into compliance is the essential first step toward resolving any sales tax delinquency.

Business Risk When Falling Behind

Sales tax delinquencies pose an existential threat to businesses. Beyond the immediate financial burden of penalties and interest, the state can revoke or refuse to renew the business’s sales tax certificate of authority. Without this certificate, the business cannot legally operate. State agencies may also file liens against business assets and personal assets of responsible parties, levy bank accounts, and seize inventory.

For business owners with professional licenses, a state tax delinquency can also trigger license suspension or revocation proceedings. Many licensing boards require proof of tax compliance, and a failure to resolve outstanding sales tax obligations can put an entire professional practice at risk.

Use Tax Issues

Use tax is the complement to sales tax — it applies when a business or individual purchases taxable goods or services without paying sales tax, typically in out-of-state or online transactions. The purchaser is responsible for self-assessing and remitting use tax to their home state. Many businesses are unaware of this obligation until they are audited.

State auditors have become increasingly sophisticated in identifying use tax liabilities, particularly for businesses that make significant purchases from out-of-state vendors. A use tax audit can result in assessments covering multiple years of untaxed purchases, plus penalties and interest. We represent businesses in use tax audits and negotiate settlements that reflect the actual tax owed rather than inflated estimates.

State Tax Authority Negotiation

Each state has its own procedures for resolving sales tax delinquencies, and the available options vary significantly. Some states offer formal installment agreement programs, while others negotiate on a case-by-case basis. Certain states have voluntary disclosure programs that can reduce penalties for businesses that come forward proactively. Others offer compromise settlement programs similar to the federal Offer in Compromise.

We represent businesses before state tax authorities across multiple jurisdictions and understand the specific programs, procedures, and negotiation leverage points available in each state. The goal is to resolve the delinquency on the most favorable terms available while restoring the business to full compliance.