Sales Tax Penalty

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Sales and use tax, or the sales tax is collected and reported on a local, State level.  It is a State taxation authority that may levy a sales tax penalty against a business for failure to collect the State sales tax.  Most States will require a vendor, or business, to register as a sales tax vendor, collect the appropriate sales tax, keep accurate records concerning the tax collected, file State tax returns and pay the sales tax collected with the returns.  The business is a sort of trustee of the state tax audit, with a responsibility to collect the proper sales tax from customers and to then pay that amount collected within its business sales tax return.  Any failure by the business entity to remit the sales tax collected in the course of its business is a crime in most States.

Sales Tax Rules

A business that makes taxable sales of tangible personal property, performs any taxable services, receives amusement charges, or operates a hotel or motel, is usually required to register as a sales tax vendor.  A business that acquires all or part of the assets of an existing business that is registered or required to register as a sales tax vendor, must also register as a vendor or they may be considered committing sales tax evasion.  In some States a business must be a registered sales tax vendor to accept State sales tax exemption certificates or documents such as those from a wholesaler.  Many wholesalers are not required to collect sales tax because all of their sales are for resale and as such are sales not subject to sales tax.

Failure to Comply with Responsibilities

If a vendor does not pay the proper amount of sales tax due on time, he will often receive a penalty for tax and be charged interest, compounded daily, on the amount he didn’t pay under business tax law. In addition, various civil and criminal penalties may apply if he failed to comply with his responsibilities as a vendor to collect a sales tax. It is recommended to hire a tax evasion lawyer as soon as possible if this happens to you. (See more on complying with sales tax law as a vendor).

In some States It is a crime for a sales tax vendor to:

• File a return that the vendor knows contains false information;

• Sell property or services subject to tax without being a registered vendor;

• Fail to keep any required sales taxation records;

• Fail to collect sales tax from a customer; or

• Fail to pay any sales tax collected in their capacity as a trustee of the State.

Sales Tax Law

The Tax Law imposes personal responsibility for payment of sales tax for business on certain owners, officers, directors, employees, partners, or members of a business that have an outstanding sales tax liability.  Being personally liable means that your personal assets, including your home, car, savings accounts, etc., could be taken by the Tax Department to satisfy the sales tax liability of your business. They can be held personally responsible even if you have an employee or an accountant or an attorney handle your sales tax matters. In addition, they can be held personally responsible even though the business is a corporation or a limited liability company.  It is undeniably essential to have the assistance of a qualified tax evasion attorney or sales tax attorney to protect a business, its owner and employees by providing a clear understanding of all State sales tax regulations and requirements utilized for properly collecting and reporting revenue derived from State sales taxes.

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