Understanding sales tax notices

Modified on Wed, 9 Oct at 7:33 PM

As a business owner, receiving a notice from the Department of Revenue (DOR) regarding sales tax can be a cause for concern. However, understanding the different types of notices and how to respond can help you address the issue effectively.

Common Type of Sales Tax Notices

The name of the notice may differ state-to-state, so these are a general overview of the types of notices you may receive regarding or related to your sales tax account.

The Department of Revenue (DOR) will send notices:

Electronically: through the state online account and typically sends an email notification that a letter has been sent for review.
Postal mail: to the mailing address provided at the time of sales tax registration, it’s important to ensure the mailing address is correct and current.

Type	Description	Next Steps
Filing reminders	Reminder of upcoming sales tax filing deadlines	Help ensure you file on time to avoid penalties
Adjustment	Informs you of changes to your filed return, which may result in either an additional amount due or a refund	Review the changes to confirm you agree
Compliance	General notices related to changes in tax laws, regulations, or filing procedures	Review updates to verify how it may affect your business
Deficiency	The DOR believes you have underpaid your sales tax It will detail the amount owed and the reason for the discrepancy	Review the amount and reason to make payment necessary to stay compliant
Proposed assessment	Preliminary notice indicating the DOR's intent to assess a tax liability against you	Use this as an opportunity to provide additional information or dispute the assessment
Overpayment	Indicates that you have overpaid your sales tax and are eligible for a refund	Follow the process to request the refund
Audit	The DOR will be conducting an audit of your business records to verify your sales tax compliance	Use this as an opportunity to gather all documentation related to your sales tax account
Delinquency	Your sales tax return is overdue or that you have failed to pay your taxes on time	Review the amount for validity and pay the amount requested

How To Handle Sales Tax Notices

Always read the notice thoroughly. Understand what is being requested, the due dates, and any actions you need to take. By understanding the different types of sales tax notices and taking proactive steps to address them, you can help ensure your business remains in compliance with tax laws and avoids unnecessary penalties.

FAQ

How do I get more information on a notice?

Typically every notice will include a contact information and next steps.