3 Things to Remember if You Get a Sales Tax Notice

Dan Barros
June 1, 2023

This blog was last updated on June 13, 2023

Have you ever received a sales tax notice from a state department of revenue? Whether you answered yes or no, there are important things to keep top of mind to help keep your business prepared.

Finding out that you have failed to comply with one or more of your sales tax obligations can be startling. However, resolving the issue quickly can save you from incurring more penalties.

Remember: it’s impossible to eliminate risk entirely. Instead, it’s more about minimizing liability and exposure and being ready when a sales tax notice does arrive.

Recognize an actual sales tax notice

The actual notice that you receive, notifying your company of a missed sales tax obligation, can be called various names.

These include, but are not necessarily limited to, the following:

  • Notice of Intent to Assess
  • Notice of Final Assessment
  • Filing Frequency Change
  • Notice of Balance Due
  • Notice of Failure to File
  • Notice of Routine Audit

Understand why you received the notice

Not all sales tax notices mean that your business has done something wrong. There are some that are informational or simply asking for your organization to send more data. Different types of notices could include:

  • Notices related to credits and/or refunds
  • Amnesty notices
  • Notices related to tax return discrepancies
  • Administrative notices (i.e., reminder to file, submission issues)
  • Rate updates
  • Account renewal notices
  • Changes to “accelerated monthly payment” status

Due to the variability involving sales tax notices and the ways they may arise, it is crucial that you understand what the notice is regarding and what is needed to resolve it.

The cost of doing nothing

Should a business opt to not take any action regarding a received notice, it’s important to understand the potential consequences. For example, this could lead to liens or the revocation of a license. It may also impact the attractiveness and value of the company when you are looking to sell.

Remember that making a mistake with your sales tax filing is one thing, but ignoring a sales tax notice is entirely different. It could make your company – and even the industry in which you operate – a bigger target for an audit. Furthermore, an auditor can take your inaction into account when conducting an audit. No business can guarantee that it never encounters an audit, but it’s not beneficial to ignore basic steps that can help to prevent them. A typical audit can take 30 to 45 days and cost companies anywhere from $100,000 to $300,000.

Overall, receiving a sales tax notice is not the end of the world. Be sure to contact whichever state agency that sent it – is this automatic? Was it triggered by a system delay or is something actually wrong? You can determine whether or not your company still owes sales tax or if a mistake was made. While stressful, it could be worth it to find out as much information as you can to know exactly how to move forward.

Take Action

Still have questions or concerns about the possibility of a sales tax notice? Reach out to our team to learn more.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Dan Barros

Dan Barros is a Junior Regulatory Counsel in the Regulatory Analysis & Design Department at Sovos. Dan focuses on domestic sales and use taxes and related fees. He received his J.D. from New England Law | Boston and his B.A. in Economics from UMass Lowell. Dan is a member of the Massachusetts Bar.
Share this post

DtC wine market
North America ShipCompliant
March 7, 2025
From Decline to Opportunity: Lessons from the 2024 DtC Market

This blog was last updated on March 7, 2025 The 2025 Direct-to-Consumer Wine Shipping Report offers more than just data—it provides valuable insights into the trends shaping the industry and the factors driving change. To delve deeper into these findings, industry experts Andrew Adams from WineBusiness Analytics and Alex Koral from Sovos ShipCompliant joined forces […]

Mississippi state map
North America ShipCompliant
March 3, 2025
Mississippi Opens the Door to Direct-to-Consumer Wine Shipping

This blog was last updated on March 3, 2025 In a shockingly quick turn of events, the Mississippi governor has signed a bill that will enable the direct-to-consumer (DtC) shipping of wine, making it the 48th state to grant its residents greater access to the national wine market.   The bill, SB 2145, is set to […]

dtc spirits new york
North America ShipCompliant
February 14, 2025
A New Era for DtC Spirits Shipping: How New York’s Market is Taking Shape

This blog was last updated on March 11, 2025 In the fall of 2024, New York became the latest state to open its doors to direct-to-consumer (DtC) spirits shipping, marking a significant milestone for the industry. As one of the most populous states with a thriving market for craft and high-end spirits, the shift was […]

North America Unclaimed Property
February 10, 2025
Delaware Announces 2025 VDA Invitation Dates

This blog was last updated on February 14, 2025 Mark your calendars – April 11, 2025 and August 15, 2025 are this year’s anticipated release dates for the Delaware’s Secretary of State (SOS) VDA program invitations. In the event that an organization receives an invitation to participate in the Voluntary Disclosure Agreement (VDA) program  , […]

North America Sales & Use Tax
February 6, 2025
The Tariff and Sales Tax Mishmash – Untying the Mess

This blog was last updated on February 14, 2025 Talk of tariffs dominates the current news cycle with some commentators suggesting that tariffs will spell disaster for our economy while others say the exact opposite. We’ve seen the stock market sometimes fluctuate as tariffs are announced but later suspended, leaving us to wonder whether an […]