Sales Tax 101

Where to File a Sales Tax Return Even if You Didn’t Collect Sales Tax

by Mark Faggiano

zeroYou have nexus in Colorado but you just realized you haven’t made any sales in the state for quite some time. As a result, you don’t owe any sales tax. Hooray, that means you don’t have to file this period, right?

Many make this mistake, unfortunately, and it can be costly. Colorado, among other states, requires you to file even if you don’t have any money due. You have to file a “zero filing of return” basically to inform the state of Colorado that you’re still in business. They want to know that you exist.

Annoying? Of course! It wouldn’t be sales tax related if it wasn’t obnoxious. Not all states have this requirement, though. That would be too simple! To help you out, here’s a list of states you’ll have to zero file with plus consequences of not doing so.

Alabama
Special Rules: Depends on the locality
Late Fee: The greater of 10% of any additional tax required to be paid with the return OR $50.00.

Arizona
You must file a zero return or face a 5% penalty.

California
Late Fee: You do have to file zero return sales tax. There isn’t a penalty associated with this, however you will continue receiving account notifications, and run the risk of having your license cancelled, should too many consecutive quarters pass without any returns filed.

Colorado
Late Fee: 10% late penalty plus ½% for each additional month up to maximum18% on total tax amount plus interest and penalty-interest that has accrued up to the receipt date of the return

Connecticut
Late Fee: 15% or $50, whichever is greater

Florida
Late Fee: A minimum of $50 if 10% of Line 10 is less than $50 or 10% of the amount due on Line 10

Illinois
Late Fee:  From the website:

Tier 1 — the lesser of $250 or 2%  of the tax required to be shown due  on the return and reduced by timely payments or credits. If the return is timely filed but cannot be processed, you will have 30 days to correct the return before penalty is due.

Tier 2 — If you do not file a return within 30 days after receiving a notice of nonfiling, an additional penalty will be imposed equal to the greater of $250 or 2% of the tax shown due on the return without regard to timely payments. The additional penalty may not exceed $5,000. The penalty will be assessed even if there is no tax due.

Kansas
Late Fee: You do have to file zero return sales tax. However, there isn’t necessarily a penalty associated with this. They do mention if the state feels like you are purposely omitting sales tax information then they can fine you between $500-$10,000.

Kentucky
Late Fee: A minimum late penalty of $100 will be filed. In addition, criminal penalties may be filed.

Maryland
Special Rules: If you have no taxable sales to report and owe no tax, you should file using telefile service at 410-260-7225.
Late Fee: If you are filing late, you must enter penalty and interest charges on Line 13, using the instructions provided with your return.
Credits: Returns filed on time may take a discount on Line 6.

Massachusetts
Late Fee: Taxpayers who do not comply with the requirements to file returns, make payments or submit data to DOR in an electronic format will be subject to a penalty of up to $100 for each return, payment or data transfer submitted incorrectly to DOR.

Michigan
Late Fee: If your return is not filed, Treasury will estimate your tax and bill you. The maximum payment is $400.
Credits: Taxpayers filing annually receive a discount if the return is filed timely.

Minnesota
Late Fee: If you don’t file your return on time, we’ll assess a 5 percent penalty. If you don’t pay the tax on time, we’ll assess a penalty of: 5 percent if your payment is up to 30 days late, 10 percent if it’s 31 to 60 days late, and 15 percent if it’s more than 60 days late.

Mississippi
Late Fee: A penalty will be added, though the website does not mention what this is.

Missouri
Late Fee: There’s mention of a late fee for failing to pay, but not to file. However…
Credits: On all sales tax returns filed and paid by the required due date, you are granted a 2% timely payment allowance.

Nebraska
Late Fee: 10% of tax due or $25, whichever is greater.

Nevada
Late Fee: None found

New Jersey
Late Fee: $100 per month late fee will be imposed.

New York
Late Fee: $50

North Carolina
Late Fee: None

North Dakota
Late Fee: 5% of the state tax on line 5 or $5, whichever is greater.

Ohio
Late Fee: $50 or 10% of the tax required to be paid for the tax period.
Credits: The discount rate is .75 of 1% (0.0075) of the tax liability reported on line 6 of the Universal Sales Tax (UST-1) return. The discount only applies if the UST-1 return and full payment are received by the Ohio Department of Taxation on or before the due date.

Oklahoma
Late Fee: The impossibly complicated late fee and penalty system is detailed on the Oklahoma Tax Commission penalty FAQ.

Pennsylvania
Late Fee: Minimum payment of $2 is added.

Rhode Island
Late Fee: There are penalties for not paying, but there doesn’t appear to be one for not filing a zero return.

South Carolina
Special Rules: File your zero gross proceeds sales and use tax returns over the telephone: 803-898-5918.
Late Fee: The fee appears to be based on taxes due rather than filing, however, they do mention you will be hit with a penalty if you don’t file on time.

South Dakota
Late Fee: $10 minimum, even if no tax is due.

Tennessee
Special Rules: Zero returns should be filed via telefile – 800-342-1003.
Late Fee: A minimal penalty of $15 even when the return reflects no tax due.

Texas
Late Fee: A fee of $50 is added on any tax due every time a return is filed late.

Virginia
Late Fee: The minimum fee for not filing is $100.

Washington
Late Fee: Interest accrues for missed payments but no late fee for missed filing.

Washington DC
Late Fee: Penalties accrue based only on missed payments; however, you do have to file if you have zero tax due.

West Virginia
Late Fee: If you file your return more than six months after the due date and you owe tax, a late filing penalty will be added to your payment.

Wisconsin
Late Fee: There is a $20 late filing fee for not filing a return by the due date by neglect. However, if the return was filed late because of the death of the person required to file the return, the penalty will be graciously waived.

Wyoming
Late Fee: The penalty for not filing the return by the due date is $10.00.

And there you have it. If you haven’t been filing with these states, it might be worth a look to make sure you haven’t been accruing late fees and penalties!

Do you have questions or comments about filing zero returns? Start the conversation in the comments!

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