How to Fill Out a Sales and Use Tax Return

A sales and use tax return serves as a formal declaration for businesses to report the sales tax collected from customers and the use tax owed on certain purchases. This filing ensures that businesses remit these collected or accrued taxes to the appropriate taxing authority. It represents a regular compliance obligation for businesses engaged in selling taxable goods or services, or those that acquire items without sales tax for their own taxable use. Completing this return accurately and on time prevents potential penalties and maintains a business’s good standing with tax administrations. This guide outlines the steps for preparing, completing, and submitting this tax document.

Information Required for Your Return

Before filling out a sales and use tax return, businesses must gather specific financial data and supporting documentation. This ensures accuracy and provides the necessary figures for each section. The process begins with aggregating all gross sales for the reporting period, which includes total revenue from all sales transactions, regardless of taxability. This figure is typically compiled from point-of-sale systems, e-commerce platforms, or accounting software.

Next, identify and quantify exempt sales and other allowable deductions. Common exemptions include sales for resale, where the purchaser provides a valid resale certificate, or sales to qualifying tax-exempt organizations like government agencies or non-profit entities, which often require specific exemption certificates. Certain services or products may also be exempt from sales tax, depending on the jurisdiction. Businesses must maintain detailed records, such as exemption certificates, invoices marked “for resale,” or specific transaction codes, to substantiate each deduction claimed.

Calculating taxable sales involves subtracting total documented exempt sales and other deductions from the gross sales figure. This yields the amount of sales subject to sales tax, which forms the basis for determining the sales tax liability. Businesses must also track the total sales tax collected directly from customers during the reporting period. This collected amount is separate from the calculated tax liability and represents funds held in trust for the taxing authority.

Businesses also need to account for purchases subject to use tax. Use tax applies to items purchased outside the business’s taxing jurisdiction without sales tax, but then used, stored, or consumed within that jurisdiction. Examples include office supplies ordered online from an out-of-state vendor that did not charge sales tax, or equipment acquired from a supplier in a different state. These purchases must be identified and tracked, often through accounts payable records or expense reports, to ensure accurate reporting of the use tax liability.

Businesses should identify any applicable credits that can reduce their total tax obligation. Common credits include vendor discounts, which are allowances provided by some jurisdictions for timely collection and remittance of sales tax. Another credit may arise from bad debts, where sales tax was collected and remitted on a sale that later became uncollectible. Documentation for credits, such as discount calculations or bad debt write-off records, must be retained.

Filling Out the Return Form

With all financial information compiled, the next stage involves accurately transferring this data onto the sales and use tax return form, whether physical or online. The initial section requires the business’s identifying information, including the legal business name, tax identification number, and the specific reporting period.

The return typically begins by asking for the total gross sales for the reporting period. This figure is entered on the designated line. Following this, the form provides sections for deducting exempt sales and other non-taxable transactions. Businesses will categorize and enter amounts for various types of exemptions, such as sales for resale or sales to tax-exempt organizations.

The form then guides the user to calculate taxable sales by subtracting total reported deductions from gross sales. This calculation is often automatic in online portals or requires manual subtraction on paper forms. Once taxable sales are established, calculate the sales tax due by applying the applicable sales tax rate(s). If a business operates in multiple jurisdictions with varying rates, or sells different types of goods subject to different rates, the form may require separate calculations for each rate or jurisdiction before totaling them.

After calculating the sales tax due, the return will have a section for reporting purchases subject to use tax. Businesses enter the total value of these purchases and then calculate the corresponding use tax owed by applying the relevant use tax rate. The form also includes lines for applying any available credits or adjustments, such as vendor discounts for timely payment or deductions for bad debts. These amounts are subtracted from the total tax initially calculated.

The final step is to determine the total tax due. This figure represents the sum of sales tax and use tax owed, minus any applicable credits or adjustments. Before submission, review all entries for accuracy and completeness. On paper forms, the return must be signed and dated by an authorized individual, certifying that the information provided is true and correct under penalty of perjury.

Submitting Your Completed Return

After completing all calculations and verifying the accuracy of the sales and use tax return, the final phase involves its submission and payment of any tax due. The most common submission method is through an online portal provided by the taxing authority. This involves logging into a secure account, navigating to the sales and use tax filing section, and electronically submitting the data.

Alternatively, businesses may submit their return by mail. This method requires printing the completed form and mailing it to the designated address. Using a mail service with tracking or delivery confirmation is advisable for proof of timely submission. Some jurisdictions may also allow in-person submission at a local tax office.

Payment options for sales and use tax include electronic funds transfer (EFT), which allows for direct debit from a bank account, or payment by check. Some jurisdictions may also accept credit card payments, though these often incur a processing fee. When paying by check, it should be made payable to the specific taxing authority and often requires the business’s tax ID number or reporting period on the memo line.

Timely submission and payment are important to avoid penalties and interest charges. Deadlines for sales and use tax returns vary based on reporting frequency (e.g., monthly, quarterly, annually) and are specific to the jurisdiction. These deadlines are published on the taxing authority’s website. Failure to file or pay by the due date can result in penalties, which often accrue as a percentage of the unpaid tax for each month or part of a month the payment is late.

Upon submission, retain copies of the submitted return, any payment confirmations, and all supporting documentation for at least three to seven years. This record-keeping helps businesses respond to inquiries or audits from the taxing authority. After electronic submission, businesses can expect a digital confirmation, while mailed returns may not provide immediate acknowledgment unless a tracking service is used.