How to Handle a Sales Tax Filing Frequency Change

Jun 13, 2024 | Compliance, Sales Tax

When you register for a sales tax permit, the state assigns your business a filing frequency. 

This frequency is generally monthly, quarterly, or annually, though some states have other frequencies, such as twice per year. 

Your assigned filing frequency generally depends on either how much revenue your business generates in the state or how much sales tax you collect. For example, a multi-million dollar business is usually required to file and remit sales tax every month. A small or seasonal business may only be required to file once per year. 

But as your business changes, so might your sales tax filing frequency. 

What determines sales tax filing frequency? 

Each state sets their own thresholds for which taxpayers pay monthly, quarterly, and annually (or other, less common, frequencies). The states want their money in their treasury, so the more you collect, the more often they require that you remit that sales tax back.

Some states, like Georgia, start all taxpayers out filing monthly and then change your frequency depending on your first year or so of tax filings. Other states trust you to report your expected revenue upon registration, then assign your filing frequency from there.  

Filing frequencies typically change for the following reasons:

  1. You’re making a lot more revenue or collecting a lot more sales tax than you did when you first started collecting on behalf of the state
  2. The state’s sales tax rules and laws have changed, meaning your business now falls into a different filing frequency bucket

I received a change of filing frequency notification. Now what? 

It’s vital to read every single notification you receive from your state’s taxing authority, because they could be notifying you of a filing frequency change.

If you receive a filing frequency change, you should:

  1. Reschedule your sales tax filings – If you handle sales tax yourself, this may be as simple as changing the date on your calendar to your new sales tax filing due date, but may also require software changes 
  2. Alert your outsourced sales tax team – As you know if you sell in multiple states, sales tax due dates are tricky. If you use a service like HOST to file sales tax, let us know immediately so we can change your frequency and help you avoid fines and penalties  
  3. Set a new frequency in software – Automatic sales tax filing software like TaxJa requires that you provide a sales tax filing frequency when setting up a new state. Be sure to change your filing frequency ASAP or the software may have to skip a filing

What happens if I miss a filing frequency change? 

The most common filing frequency change problem scenario we see at HOST is a state alerting the business to a new, more often, filing frequency and the business not acting fast enough.

For example, say you’re currently required to file quarterly in Texas, but business is going well and the state decides you’ve met their threshold to file monthly. If the state tells you to file monthly starting in April, but you don’t implement the change until July, you’ve now missed at least three sales tax filings. Most states charge a late fee for each missed filing, plus interest based on the amount of sales tax due but not remitted. 

In this case, you’ll be required to file any missed returns and pay the penalties and interest.

Need help with a filing frequency change or other sales tax notices? Contact HOST today!