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10 Reasons Why a Startup Corporation May receive a Sales Tax Notice

Sales tax notices can be a headache for startups. You’re so busy building your technology or trying to find customers that you don’t want to get distracted having to deal with these notices.

That’s why Kruze’s Team of Sales Tax Experts is happy to read your notice, research it, and get it fixed for you. We’ll also explain what happened so you can avoid them in the future! 

Here is a quick list of what could have caused the notice so it’s not as scary. :):

  1. Failure to collect sales tax: If a corporation made a purchase and failed to collect sales tax, use tax will be assessed. This happens quite often with California clients.
  2. Payroll tax registration: Some businesses register for payroll tax in Michigan, which sets up a sales tax account as well. If a notice is received from the payroll provider to complete the sales tax return portion, the corporation should make sure to comply.
  3. Excise tax returns: Many clients register for payroll tax in Washington and receive notices for excise tax returns, not realizing that payroll tax automatically requires an excise tax return.
  4. Failing to file a return monthly: If a business has registered for sales tax but fails to file a return monthly, they may receive a sales tax notice.
  5. Change in filing frequency: If a corporation has a change in filing frequency and fails to realize it, they may receive a sales tax notice.
  6. Failure to remit sales tax collected: One of the common reasons for sales tax notices is the failure to remit sales tax collected from customers on taxable transactions.
  7. Incorrect reporting: Incorrectly reporting the amount of sales tax collected or paid on a return can lead to a sales tax notice.
  8. Failure to register for a sales tax permit: A business must register for a sales tax permit in states where they have a nexus. Failure to do so can result in sales tax notices.
  9. Underreporting taxable sales or transactions: Failing to report taxable sales or transactions can lead to sales tax notices.
  10. Late filing or payment of sales tax returns: If a business fails to file or pay their sales tax returns on time, they may receive a sales tax notice.

Get a sales tax notice? The Kruze’s Sales Tax Team is here to support you.


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