Annual reconciliations can be a critical aspect for businesses as they work to achieve tax compliance. They are used to resolve all payments made to the state through the year and make any necessary corrections. For example, a company may have already filed its tax returns, but discovers there is a backdated transaction for one month due to an overpayment refund. Or perhaps there was additional tax due on a purchase, which could also require an annual reconciliation.
Several states have unique requirements, such as specific forms and due dates, for filing annual reconciliations. We’ve highlighted the key points for those states below.
Connecticut
Connecticut has a disaggregated sales tax return that acts as an annual reconciliation return, which is only required by businesses with multiple physical locations in the state. The return must be filed through myconneCT by November 1, 2020. Normally it is due on October 1.
Hawaii
For taxable years beginning on or after January 1, 2020, form G-49 must be filed electronically. A penalty of 2% of the tax due will be assessed if a taxpayer who is required to file electronically fails to do so. The form must be filled on or before the 20th day of the fourth month following the close of the tax year (most likely they are filing on a calendar year basis and therefore the due date will be April 20th). Tax filers can send the form on the next business day if the filing date falls on a holiday or weekend.
The annual return is a summary of your activity for the entire year. There will be no additional tax due if the business income, exemptions, taxable income, and taxes due were accurately reported on the periodic tax returns. Form G-49 also may be used to make corrections to the amounts previously reported. For example, if you forgot to claim an allowable exemption on your periodic tax return (Form G-45), you may include the exemption on your annual tax return. Doing so will lower your tax due for the year and result in a refund. Filing the annual tax return ensures that the three-year statute of limitations period begins. If you do not file your annual tax return, the Department can make adjustments to the return at any time.
Michigan
Michigan uses the same return that is used for annual filers but the reconciliation return is used for monthly and quarterly filers. Called the 5081 Form, it is due the last day of February of every year. It can be filed by paper or online to the Michigan Department of Treasury.
Rhode Island
Rhode Island’s annual reconciliation form, T-204R Annual, can be filed online or by regular mail to the state’s Division of Taxation. The form must be filled on or before January 31 (the last day of the following month after the end of the period).
Annual reconciliations should not be an extra burden for companies as they work toward tax compliance. Having the right partner to be a guide through the digital transformation of tax is essential, ensuring that every complex regulation is followed. Reach out to our team of experts to learn more about annual reconciliation, and how it may apply to your business.
