Blog Tax News Sales Tax Non-Compliance and Civil and Criminal Penalties

Sales Tax Non-Compliance and Civil and Criminal Penalties

By this point, most people should be aware that the Senate passed the Marketplace Fairness Act. If it is passed by the U.S. House of Representatives and signed into law by the President, and he said he would sign in, then the Act would allow states to collect sales tax from Internet retailers. There has been a lot of contention back-and-forth about it, and there are viewpoints across the spectrum on why special group of lawmakers or businesses are in favor the law while the same number of people are against it. A lot of the articles focus on how business owners just don’t have money or time to comply with all these state sales tax laws. Of note, is that many of these viewpoints are the same that were expressed when Obamacare was passed in 2010. Basically, Obamacare requires that the majority of businesses offer health insurance to their employees. For businesses that don’t comply with this, there will be a yearly penalty of $2,000 for each employee that is not covered.

Because of the huge of cost of offering health insurance coverage, compared to the alternative low penalty, a lot of businesses have opted to pay the penalty instead of incur the cost of health coverage. Because of this response, it is not surprising to hear about businesses not complying with the new sales tax law.

However, when it comes to skimping on sales tax payments, the best counsel is to just not do that. Each state has its own regulations and laws regarding sales tax penalties and noncompliance. The new Marketplace Fairness Act doesn’t have a universal penalty provision that would work in every state. Sales tax is often considered something of a “trust fund tax”. Companies are responsible for collecting the sales tax on behalf of the state, in other words. The penalties for sales tax noncompliance tend to be the worst of all tax penalties. The best advice is just to not do it! Sales tax compliance is a must!

In the majority of states, a business that doesn’t collect sales when it’s required to do so will be held liable, along with the consumer, for the sales tax that is unpaid. For instance, a company that is forced to collect $100,000, but doesn’t, in sales tax on purchases made on the Internet can be responsible for the $100,000 plus interest and penalties. If the company fails to grab the sales tax, and it goes back almost three years, then the complete liability could be more than $1,500,000, including penalties and interest.

To make things worse, the states can go after the responsible person(s) in the company who were in charging of collecting the sales tax. In other words, they can go outside the corporate shield and hit the individual responsible right in the gut, figuratively.

Each state has their own sales tax non-compliance penalties. The interest amount usually increases with the amount of time that the sales tax is unpaid. The sales tax penalty interest ranges from 5% to a maximum 25%. If there is an underpayment penalty, it increases from 3% a month to 18%.
If you need help to get you compliant with sales tax and figure the best way how to handle prior uncollected taxes contact Sales Tax Accountants today at 404-855-7000.

Georgia GA Sales Tax Penalties, Alabama AL Sales Tax Penalties, Florida FL Sales Tax Penalties.

Thanks to Sales Tax Accountants our company was able to avoid an expensive audit and save tens of thousands
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