Registering and filing state sales tax

Photo: Canva

A small business must register for sales tax in each state where it meets that state’s nexus or other registration rule, then file and pay on the schedule that state assigns. California’s quarterly dates differ from the 20th-of-the-month dates Texas and Tennessee share, and all three require returns for assigned periods, including periods with no sales.

State	Registration point	Common filing dates	Zero-sales or late-return rule
California	Seller’s permit through CDTFA	Monthly: end of next month. Quarterly: April 30, July 31, October 31, January 31	Return required
Texas	Texas sales and use tax permit	Monthly: 20th of next month. Quarterly: April 20, July 20, October 20, January 20	Return required
Tennessee	Sales and use tax account	Monthly, quarterly, or annual: generally the 20th after the period ends	Return required
New York	Certificate of Authority	Quarterly: within 20 days after quarter end	Late filing has a $50 minimum penalty
Indiana	Existing sales or other trust-tax registration		Registered businesses with neither tax due nor activity submit a $0 return; late-return penalties may reach 20 percent, with a $5 minimum

Start with the state registration requirement

The Streamlined Sales Tax Governing Board says a seller registers in every state where it has physical nexus, economic nexus, or another registration obligation.

The Streamlined Sales Tax Registration System, or SSTRS, can register a seller in participating states without a charge from the system itself. A state can still impose its own registration fee where its law requires the seller to register.

SSTRS does not file sales tax returns. In Streamlined states, sellers report and pay through the individual state’s online system on the filing schedule that state assigns.

The Streamlined Sales Tax Governing Board says 24 states have adopted simplification measures under its Agreement. Tennessee is listed as an Associate Member State, while the other 23 listed states are full members.

An employer identification number, or EIN, is a federal number issued by the Internal Revenue Service. The IRS offers the online application without charge and issues the number immediately online when the application is approved.

For a corporation or LLC, the IRS says the entity should be formed through the secretary of state before the EIN application. Texas permits a business to apply for its sales tax permit before it has a federal ID number.

California registration and filing

California requires a seller’s permit when a business is engaged in the state and intends to sell or lease tangible personal property. Both wholesalers and retailers need the permit.

The California Department of Tax and Fee Administration, or CDTFA, provides free online permit registration. There is no permit charge, although CDTFA may request a security deposit to cover unpaid tax if the business closes later.

A California seller using a registered marketplace facilitator for all of its sales does not have to register with CDTFA as a retailer. A seller can review when a business must charge sales tax while assessing whether state registration duties apply.

CDTFA assigns one of five filing frequencies using reported sales tax or anticipated taxable sales at registration. Sellers file and pay through the CDTFA Online Filing Service.

Quarterly California returns cover January through March, April through June, July through September, and October through December. Their scheduled due dates are April 30, July 31, October 31, and January 31.

Monthly accounts file by the end of the following month. A June return, for example, is due July 31, while an annual account reports January through December by January 31.

Quarterly prepay is one of the five filing frequencies CDTFA assigns. For the January through March quarter, those accounts make January’s prepayment by February 24 and February’s by March 24, while the return remains due April 30.

California requires a return by the deadline even if the business made no sales. No payment is required where no tax or fee is due.

A California weekend or state holiday deadline moves to the next business day. A payment begun on the due date counts as timely only when completed before midnight Pacific time, while EFT accounts have a 3:00 p.m. Pacific time cutoff.

Texas and Tennessee compared

Texas requires a Texas sales and use tax permit for a business selling or leasing tangible personal property, or selling taxable services, in the state. The permit has no fee, though the Texas Comptroller of Public Accounts may require a security bond.

After approval, the Comptroller tells the business whether it files monthly or quarterly. Monthly reports are due on the 20th of the next month, while quarterly reports are due April 20, July 20, October 20, and January 20.

Texas annual reports for the prior year are due January 20. A Saturday, Sunday, or legal holiday deadline shifts to the following working day.

Texas requires a report even where there were no taxable sales or purchases. A report filed late brings a $50 penalty, even before considering any late tax payment.

Tax paid from one through 30 days late receives a 5 percent penalty. Tax paid after 30 days receives a 10 percent penalty, and interest begins 61 days after the deadline.

For example, assume a business owes $1,000 in Texas tax and files its report and pays 12 days late. The tax penalty is $1,000 multiplied by 5 percent, or $50, and the late-report penalty is $50, making $100 in stated penalties.

Tennessee monthly filers submit returns and payments on the 20th after the reporting month. Its quarterly schedule runs from January 20, then April 20, July 20, and October 20, while annual filers submit by January 20.

The Tennessee Department of Revenue requires electronic returns and payments through the Tennessee Taxpayer Access Point, known as TNTAP. Registered businesses must submit a return every tax period even if they have no sales.

Tennessee registration automatically gives the retailer a resale certificate. The business can print that certificate after logging into TNTAP.

New York and Indiana points

New York requires anyone making taxable sales to obtain a Certificate of Authority. The New York State Department of Taxation and Finance says registration must happen at least 20 days before business begins, through New York Business Express.

Operating without a valid Certificate of Authority can produce a penalty up to $10,000. Filing frequency may be revised when taxable sales or tax due shift, and the Tax Department notifies the business if that happens.

An annual New York return applies when tax due is $3,000 or less during an annual filing period. New York’s bulletin puts a filer on monthly, part-quarterly returns when taxable receipts, purchases subject to tax, rents, and amusement charges total $300,000 or more for a quarter.

New York quarterly returns are due within 20 days after the quarter ends. The minimum late-filing penalty is $50, including a period with no tax due.

For Indiana businesses that already hold sales-tax or other trust-tax registrations, a $0 return is required if the period has neither tax nor activity. For a late Indiana return, the penalty may be as much as 20 percent, and it cannot be less than $5.

Keep filing separate from calculation

The amount reported for a period is the total tax collected on taxable sales during that period.

Businesses selling online can review how online sellers pay US sales tax and how sales tax is calculated on a sale when preparing their records.

Common questions

Do I file a return if I made no sales?

California, Texas, and Tennessee require a return for the assigned period even with no sales.

Can one registration system file every state return?

No. SSTRS registers sellers, but it does not submit returns.

What happens when a due date falls on a weekend?

California and Texas move a weekend or holiday deadline to the next business day. Streamlined states use the next business day when the deadline falls on a Saturday, Sunday, or legal holiday.

Does Texas charge for a sales tax permit?

Texas does not charge a permit fee. The Comptroller may require a security bond.

Sources

• Streamlined Sales Tax Governing Board: Sales Tax Registration SSTRS
• Streamlined Sales Tax Governing Board: About SSTGB
• Streamlined Sales Tax Governing Board: Filing Sales Tax Returns
• IRS: Get an employer identification number
• California Department of Tax and Fee Administration: Obtaining a Seller's Permit
• California Department of Tax and Fee Administration: Getting Started and Filing Your Return - Publication 51, Doing Business in California - What You Need to Know
• California Department of Tax and Fee Administration: Filing Dates for Sales & Use Tax Returns
• Texas Comptroller of Public Accounts: Texas Sales and Use Tax Frequently Asked Questions
• Texas Comptroller of Public Accounts: Sales and Use Tax
• Tennessee Department of Revenue: Due Dates and Tax Rates
• Tennessee Department of Revenue: Registration
• Tennessee Department of Revenue: Resale Certificate
• New York State Department of Taxation and Finance: How to Register for New York State Sales Tax
• New York State Department of Taxation and Finance: Filing Requirements for Sales and Use Tax Returns
• Indiana Department of Revenue: Sales Tax