Sales and Use Tax Return Filings: Understanding and Avoiding the Impact of Negligence Penalties

General Business

February 23, 2016
by Austin DeMoss

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Austin DeMoss Austin DeMoss
Consultant, State and Local Tax

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To encourage on-time filing and payment of sales and use taxes, states impose negligence penalties on any sales and use tax returns filed or paid late. The penalty amount can vary greatly from state to state and can be quite costly, with the penalty rate ranging from 1% to 30% of the tax due. For example, Minnesota imposes a penalty of 5% of the tax due on a return filed late, while Wisconsin imposes a penalty of 5% per month of the amount due up to 25% plus a $20 late filing fee. These penalties can add up quickly and can be very costly for a business. 


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