How to File and Pay Your Quarterly Sales Tax

Sales tax is a consumption tax paid by consumers on certain goods and services. Businesses are responsible for collecting this tax from customers at the point of sale and holding the funds in trust for state and local governments. The business must then remit these collected taxes to the appropriate government agencies on a predetermined schedule. The responsibility for accurate collection, reporting, and payment rests with the business.

Determining Your Sales Tax Filing Frequency

A state’s revenue agency assigns the frequency with which a business must file a sales tax return. This schedule—monthly, quarterly, or annually—is based on the amount of sales tax the business collects. States establish monetary thresholds to determine this frequency. For instance, a state might mandate quarterly filing for businesses with an annual sales tax liability between $2,500 and $50,000, while those with a liability over $50,000 may file monthly.

These thresholds vary significantly between states. The obligation to collect sales tax is established by having a “nexus,” which is a connection or presence in a state that creates a tax obligation. Once a business registers for a sales tax permit, the state will notify it of its assigned filing frequency. This frequency can change as a business’s sales volume grows or shrinks.

A business may be reclassified if its tax liability changes for a sustained period. For example, a drop in liability could move a business from quarterly to annual filing, while an increase can trigger a change from quarterly to monthly. State agencies send a formal notice to inform a business of any change to its filing schedule. Even if a business has no sales tax to report for a period, it is still required to file a “zero return” to maintain compliance.

Required Information and Calculations for Your Return

To prepare your quarterly return, you must gather data from your sales records. The first figure needed is your total gross sales, which is all revenue before deductions. From this amount, you must subtract any non-taxable sales. These can include sales to exempt organizations, sales for resale, and sales of non-taxable goods or services as defined by state law.

Subtracting non-taxable sales from your gross sales leaves you with your total taxable sales. To determine the tax due, multiply your total taxable sales by the applicable sales tax rate. This rate is often a combination of state and local rates for cities, counties, or special districts. The result is the amount of sales tax you must remit.

Your calculated tax liability should be reconciled with the actual amount of sales tax collected from customers. Discrepancies could indicate an error, such as using an incorrect rate. All of this information—gross sales, non-taxable sales, taxable sales, and tax due—must be entered onto the state’s sales tax return form. You must maintain records like invoices, receipts, and exemption certificates to support the figures reported.

The Quarterly Filing and Payment Process

Quarterly due dates are set by each state and fall on the 15th, 20th, or last day of the month after the reporting period ends. For example, the return for the first quarter (January-March) might be due on April 20th. If a due date falls on a weekend or a legal holiday, the deadline is extended to the next business day.

Businesses have two options for submitting their return: electronic filing or mailing a paper form. Electronic filing is conducted through the state’s online tax portal, where you enter the data from your return. Many states now mandate electronic filing for most businesses, particularly those with higher tax liabilities.

When filing by mail, the paper return and a check or money order for the tax due must be sent to the address specified by the state. For electronic filing, payment can be made through an Electronic Funds Transfer (EFT), an ACH debit, or a credit card. Some online portals allow you to schedule payments in advance.