Past Due Sales Tax and Returns
If you operate a business in California, you must be cognizant of the sales tax structure and what’s required from your company. As in most states, California does require that companies go through the process of acquiring a sales and use tax permit. In California, you must go through the California Department of Tax and Fee Administration (CDTFA) to get your sales and use tax permit. Not all businesses are required to have this in place, but if you are selling, leasing, or renting a tangible good, then you must have your sales and use tax permit.
Once you’ve got your certificate, then you must be sure to display it in the general public’s view within your business location. If you are selling, renting, or leasing a good, then you have got to collect any sales tax required by law, and once you’ve collected it, you must submit it accordingly on a monthly basis.
You, as the business owner, are solely responsible for making sure you’ve got the right permits in place and that your sales and use tax returns are being filed Monthly, Quarterly, or Annually. The due dates are set by the CDTFA and very important to keep track of.
What Happens If I Have Delinquent California Sales Tax and Returns?
As you might imagine, it’s always best to avoid being delinquent in your California sales and use tax returns. If you find that you’ve fallen behind, however, then you need to get caught up as soon as possible.
If your sales and use taxes are paid after the deadline, you can expect a 10% penalty, and if you have any tax payment considered to be late, then yet another 10% penalty can be assessed. That’s a total of 20% in penalties, but it does get worse. Each month, there is an interest charge on sales and use taxes as they remain past deadline.
The financial implications of delinquent sales and use tax returns can build up quickly, even devastating companies to the point of closure.
Avoiding and Handling Delinquent Sales and Use Tax Returns
The first step is to make sure that you have your sales tax certificate and that all of the proper permits for your business are in place. This ensures that you are all set up to actually collect and pay the taxes you’re legally bound to. You want to be certain that your resale certificate is being used as lawfully prescribed, as failure to do so could lead to a misdemeanor.
If you are facing late sales and use tax returns, the best thing to do is get them paid. The sooner the better!
Before you try to handle your sales and use tax concerns on your own, reach out to our team of tax pros. We are skilled and qualified to guide you through every step of the way to ensure that you’ve got all the proper documentation in place and that you don’t have to face potentially devastating consequences from delinquent sales and use taxes.