Pitfalls of Sales Tax Compliance: Tax Calendars

If your business sells a taxable product or service and has nexus in any state, you have a sales tax obligation. That part is straightforward. But as your business evolves, and as state and local tax laws change, you must stay informed and proactive to avoid compliance issues.

Last time, we explored how problems with your billing system can lead to sales tax trouble. Now, let’s look at another often-overlooked risk: your tax calendar.

What Tax Calendars Do

Once you've collected sales tax, you're responsible for reporting and remitting it to the appropriate jurisdictions. That process starts with sales tax registration, and it continues with maintaining a tax calendar.

This dynamic document helps you manage your monthly, quarterly, or semi-annual tax reporting and remittance obligations. But with dozens of due dates across jurisdictions, it's easy to miss something, especially with an outdated or inaccurate calendar.

A tax calendar that’s no longer current can cost your business in:

• Back taxes
• Penalties and interest
• Missed correspondence from jurisdictions due to filing errors or improper registrations

Common Tax Calendar Errors

At TaxConnex, we often see avoidable calendar-related mistakes, such as:

• Incorrect or outdated registrations
• Failure to update filing frequencies when jurisdictions change them
• Missing required prepayments or deposits
• Omitting new return types (like retail delivery fees) that certain states now require

As a growing business, you may also trigger economic or physical nexus in new jurisdictions every month. That means collecting tax in places where you haven’t yet registered to remit. If your calendar doesn’t reflect this, you’re opening the door to compliance problems.

It’s also important to only register in jurisdictions where:

• You truly have a sales tax obligation
• You’re collecting a material amount of tax (typically more than $5)

Keep in mind that different tax types require different returns. For example:

• Seller’s use tax may require a separate return from sales tax
• Filing Chicago sales tax on an Illinois return or filing the wrong return in a Colorado home-rule city can be costly errors

Building a Strong Tax Calendar

A well-structured tax calendar includes key details like:

• Entity name(s), if filing for multiple businesses
• State-by-state filtering options
• Name of the jurisdiction or tax return
• Type of tax (e.g., sales tax, use tax, retail delivery fee)
• Taxing agency or authority
• Filing frequency (monthly, quarterly, etc.)
• Tax ID number

Your tax calendar should be updated monthly and integrated with your billing system. That way, you can ensure that every dollar of sales tax collected is tied to a specific jurisdiction and an active return on your calendar.

What’s Next?

In future blog posts, we’ll explore more pitfalls of sales tax compliance, including general ledger (G/L) management, return submission, and lack of oversight.

Want to learn more now? Watch our on-demand webinar:
Don’t Test Your Luck: The Pitfalls of Sales Tax Compliance.

Stay Compliant with Confidence

TaxConnex helps businesses like yours maintain tax calendars that keep up with changing regulations. If you're unsure whether your current calendar is accurate or complete, Get in touch with us today. We’ll help you stay compliant and avoid costly tax mistakes.