Sales Tax Filing Checklist
Sales tax filed and remitted by jurisdiction. Confirmations archived. Liability accounts reconciled.
Before you start
- Sales tax registration in applicable jurisdictions
- Tax automation (Avalara, TaxJar) or manual tracker
- Filing calendar per jurisdiction
- Taxable sales by jurisdiction for the filing period
- Tax collected vs tax owed
- Exemption certificates for tax-exempt sales
The steps
- Review filing calendar for the period — Different jurisdictions have different filing frequencies (monthly, quarterly, annual). Pull the list of filings due this period. Calendar-block deadlines.
- Reconcile tax collected vs tax owed per jurisdiction — Pull from accounting: tax collected by jurisdiction. Compare to tax owed (calculated from sales). Variances need investigation — often pricing rounding or rate changes.
- Apply exemptions and adjustments — For tax-exempt sales, verify exemption certificate is on file. For returns/refunds, adjust collected tax. For interstate sales, apply the right rules (sourcing varies by state).
- Verify nexus implications — Has business expanded into new states? Track nexus thresholds (economic + physical). Missing nexus filings creates back-tax liability. If unsure, escalate to the tax CPA.
- File returns and remit tax — File via the tax automation tool or state portals. Remit payment per jurisdiction's required method (ACH, EFT, check). Save filing confirmations.
- Reconcile remittance against books — Once remitted, post the tax payment to the appropriate liability account. Confirm liability account is reset to zero for the closed period.
- Archive filings and confirmations — Archive: filed return PDF, payment confirmation, jurisdiction acknowledgment. Retain for 7+ years (varies by state). Sales tax audits go back years — documentation is the defense.
If it goes wrong
Filing deadline missed
File late immediately, pay penalty. Reform the filing calendar with reminders 7 days before each deadline. Single-source-of-truth calendar.
Tax collected exceeds tax owed (over-collected)
File honestly with what's owed. Over-collected tax must be refunded to customers if the over-collection was on a specific transaction, or remitted as collected per state rules.
Missed nexus filing in a new state
Register immediately, file back returns. Voluntary disclosure programs (VDA) reduce penalty exposure. Engage a tax CPA for VDA negotiations.
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