You may think your business is in full compliance with your sales tax obligations nationwide – and you may well be – but America’s 10,000-plus sales tax jurisdictions love to send notices. And without the right correspondence or adjustments due to these notices, you could be in hot water.
These days, notices may arrive in snail mail, show up in your email inbox, or simply be posted to your account on the jurisdiction’s website. You must know where to look and be sure you have someone designated to read and respond as needed.
If you haven’t received one of these threatening-looking letters yet or haven’t gotten one in a while, you’re likely on borrowed time.
Ignoring a notice completely could put you and your company at risk. You could be opening the door to additional penalties. Every notice represents information you need to remain in compliance and something that requires diligent monitoring and timely attention and response.
It could be nothing, but…
There are many reasons you could receive a notice – not all of which mean you are in trouble, but some are. Have your filing deadlines changed? Is there a change in the way your returns should be filed? Was your return filed timely? Was the return prepared properly? Was your payment received?
The first step before you jump to conclusions and anxieties – read the entire notice. The jurisdiction might be informing you of something as routine as use of a new form, a reminder to file, a change in the tax rate or new procedures or deadlines you must follow to file your sales tax returns. Maybe you even have a credit coming!
An immediate response to such a notice might not be necessary. On the other hand, don’t just file it in a drawer and forget about it. Follow instructions or recommendations on the notice and make appropriate changes to your system to maintain sales tax compliance.
If a third party handles your sales tax obligations and is not already monitoring your notices for you, be sure to let them know about this and all other notices. If utilizing a software, this could mean making adjustments within the software or waiting on a support ticket to be filed and responded to.
Luckily, a hands-on service provider like TaxConnex monitors and resolves notices for you. However, if you are using one of the sales tax software providers, the notice tracking and resolution are often left up to you.
Sometimes a notice is just a nuisance and something that you need to clarify with the jurisdiction. If there was an actual mistake or error, pay close attention to any action the notice wants you to take. If you don’t take action, the situation is only going to get worse (and more expensive). Once you take the necessary action, be sure to follow up and make sure the issue has been closed. You don’t want penalties to pile up because mail didn’t arrive in time.
Notices are a standard part of managing sales tax. It would be nice to think that you may never receive them, but that’s unlikely. At TaxConnex, our goal is to ensure that IF notices are received, they are taken care of quickly and professionally.
If you’re tired of responding to these sales tax notices, or if your current outsourcing provider is not clearing your notices quickly enough, we’d love to talk about how TaxConnex can minimize your notices and reduce your stress related to sales tax. Get in touch to learn more!