When you registered for your sales tax permit, the state assigned you a filing frequency. This frequency could be monthly, quarterly, annually or, in rare cases, semi-annually. States have different criteria for assigning you a filing frequency, so if you have sales tax nexus in more than one state, you may find yourself paying one state monthly and another annually.
When your state sales tax filing due date approaches, your next step is to report how much sales tax you collected from buyers in that state over the taxable period. (Example: If you file quarterly, your taxable period may be January 1st through March 31st. If you file annually, your taxable period may be the whole year 2016. Remember, your state will tell you your filing frequency when you apply for your sales tax permit.)
But there’s a catch. While a handful of states are friendly and just want to know how much sales tax you collected from buyers in the state, most states are… less than nice. They want you to break down how much sales tax you’ve collected not just from buyers in the state, but by county, city and other special taxing jurisdiction. For them, this is the only way they can allocate to which local areas the money should go. After all, sales tax pays for things like schools and roads. But for you, this means a major headache. Imagine poring over all of your sales for the past year and then figuring out which city, state and other taxing district they happen to fall into. It gets even more complicated if you sell on more than one online channel or shopping cart, or if you sell online and at a brick-and-mortar business.
For many years, this process required spreadsheets, state tax tables and lots of time and headache.
This is where TaxJar comes in. TaxJar integrates with the channels you sell on and creates return-ready reports so you don’t have to. All you have to do is take your TaxJar state report, login and fill out your tax return. Or, if you’d rather not deal with it at all, TaxJar will also file your sales tax returns for you in most states.