MHFA | Sales Tax Filings: Can a “Zero Return” Protect Your Business in the Future?
2010
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Sales Tax Filings: Can a “Zero Return” Protect Your Business in the Future?

Can a “zero return” protect your business in the future?

 

There are many reasons a business may not need to charge sales tax and file a sales tax return. A few examples are:

  • Nontaxable nature of the business
  • Purchaser will resell the item
  • Purchaser is an exempt organization
  • Purchaser is a manufacturing company

 

However, even if a sales tax is not due and a return is not required, it may provide your business some protection to file a sales tax return showing zero taxable sales and no sales tax due. Once you file a sales tax return, the Department of Revenue has 3 years to audit your return. After 3 years, the statute of limitations on that particular year has run out and you can no longer be audited.  If you do get audited, the audit would be limited to just the three most recent years. However, without filing a sales tax return, no statute of limitation has been started. The Department of Revenue can go back 5 years, and maybe even longer, to collect any assessed and unpaid sales tax determined in an audit.

 

Curious if you may benefit from filing a protective “zero” sales tax return?  Contact us with any questions!