Sales tax frequency refers to how often your business must remit sales tax collected to the government. This frequency can vary depending on state or local regulations, business size, and sales volume. Your filing frequency is assigned by the state upon sales tax license registration.
Frequencies Overview
While specific regulations on determining frequency vary, the most common sales tax remittance frequencies include:
Monthly: collect and remit sales tax every month
Quarterly: collect and remit sales tax every three months
Semi-annually: collect and remit sales tax twice a year
Annually: collect and remit sales tax once a year
There are some naming convention differences in some US states, such as New York labeling a monthly frequency “quarterly prepayment.”
How Filing Frequency Is Determined
Each state has its own criteria for determining the filing frequency. The criteria is typically based on your business's gross sales or tax liability from previous periods.
Sales volume: businesses with high sales volume often have more frequent remittance requirements
Estimated annual sales: The projected sales volume can influence the assigned frequency.
Prior year's sales: If the business has been operating for a previous year, the state may consider the sales volume from that year.
Business structure: corporations or LLCs may have different reporting obligations than sole proprietorship or partnerships
State and local laws: specific regulations within a jurisdiction determine the frequency
For example:
There is a $300,000 in annual sales tax collection threshold for monthly filing in New York.
Businesses collecting more than $100,000 sales tax per year must file monthly in Texas.
Other Case Examples
While the above frequencies are common, some situations can lead to unique remittance requirements.
New businesses: may have different initial reporting requirements or grace periods
Business structure changes: if your business changes structure (for example, from sole proprietorship to an LLC), the frequency might also change
Tax-exempt sales: businesses selling tax-exempt goods or services have specific reporting obligations
Nexus: businesses must remit sales tax in states where they have nexus, which can be physical presence, economic presence, or trailing nexus.
Importance of Adhering to Assigned Frequency
Failing to file your sales tax returns on the assigned frequency can lead to penalties and interest charges. It is crucial to understand and follow the state's specific requirements to ensure compliance.
If your business sales volume changes significantly, you may need to adjust filing frequency. Oftentimes, the state will send a notice over your state sales tax online dashboard or by mail. To change your filing frequency, you must have approval from the state.
Whether you file monthly, quarterly, or annually, ensuring timely and accurate filings helps maintain compliance and avoids penalties. You can review your current filing frequency on your state’s online dashboard. If you have received notification of frequency change or your business undergoes significant changes, reach out to your Taxually professional to verify you’re compliant.
FAQ
How will I be notified if my filing frequency has changed?
The state will send you a notice by mail or via your online dashboard.
Can I opt to change the filing frequency so it makes more sense for my accounting purposes?
Yes, you can typically change the assigned filing frequency for your sales tax returns in the United States. However, the specific process and requirements may vary depending on your state or jurisdiction.
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