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Must I File a Sales Tax Return Even if I Don’t Owe Any?

You had a really bad month, and didn’t make any sales in a few states in which you have nexus and regularly make sales. That’s horrible news for your bottom line, but if there’s a silver lining in there, it means that at least you don’t have to file a sales return in those states, right?

Better think again.

Most states require you to file a "zero sales tax return," even if you didn’t have a single sale. Why? Because they want to keep up with the businesses registered and make sure they’re still in business.

But like all sales-tax rules, each state has their own rules and regulations when it comes to filing zero sales tax returns. Here’s a rundown on some of the states to give you an idea of how much the rules can vary.

  • California. You must file a zero sales tax return in the state, even if you don’t have any sales. However, unlike some other states, California won’t charge you a late fee if you miss the deadline. The Board of Equalization will contact you and ask for the return, and if you still fail to file it, they make revoke your permit.
  • Connecticut. The Department of Revenue Services says that even if you have no sales, you must file a zero sales tax return. Failure to do so will result in your account becoming delinquent and you’ll be charged a 2-15 percent late fee, plus 1 percent interest.
  • Kentucky. This state takes not filing a zero sales tax return very seriously. The Kentucky Department of Revenue requires that sellers file them, and if they don’t, they impose a minimum $100 penalty.
  • Texas. The Lone Star State requires you to file a zero sales tax return and imposes some pretty strict penalties if you don’t. The state says failure to file may result in “collection actions, including, but not limited to, additional late filing penalties, liens, and criminal charges.” In addition, you’ll pay a $50 late fee.

Keep in mind that if you don’t make enough sales to justify filing sales tax returns every month in certain states, some Department of Revenues will allow you to ask for alternative filing options. For example, the state may allow you to file quarterly or even yearly if your sales justify it.

Whatever you do, it’s imperative that you know the rules for every state in which you have nexus. Use our State’s Sales Tax Guides or contact the Department of Revenues in each state to get the information on your own.

Avalara Author
Suzanne Kearns
Avalara Author Suzanne Kearns