You may think your business is in full compliance with your sales tax obligations nationwide – and you may well be – but America’s 13,000-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 by 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. This can be an issue for those that are utilizing a software that only manages the notices you alert them to, but also doesn’t give you access to all your accounts. Without access to your accounts, you can’t check for notices and could be filing incorrectly.
Ignoring a sales tax 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.
Reasons Notices Are Sent
There are many reasons you could receive a notice – not all of which mean you are in trouble, but some are. Below are a few of the reasons you could receive a notice:
- Adjustments to your filing calendar – a change to monthly, quarterly or bi-annually
- A change of date your filings are due
- A change in how you need to submit/file your returns. This could be address change or digital vs paper
- You were late on a payment or filing, or didn’t file at all
- A change in tax rates
- You overpaid and have a credit coming your way
- An error was found in your return
- And more…
An immediate response may not be necessary, but it is important to read the entire notice and understand what steps need to be taken, if anyway. 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!