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Sales Tax

What should I do when I get a sales tax notice from a state?

June 30, 2026

Read the notice twice. Note the notice type, the tax period it covers, and the response deadline printed on it, then pull the return you filed for that period and compare before you call the state or pay anything. Most notices are one of a handful of types: some are correctable in a day, and some are not. This article covers what each type means, the mistakes that make things worse, and when to hand the notice to a specialist. This is general information, not tax advice for a specific situation.

Table of Contents

What does a sales tax notice from a state usually mean?

A sales tax notice means the state revenue department has flagged something about your account and is telling you formally. Notices arrive by postal mail to the address on your sales tax registration and electronically through your state online account, so a notice sent to an old address is still a real notice, according to Taxually.

The common notice types are filing reminders, delinquency notices, deficiency notices, proposed assessments, adjustment notices, overpayment notices, and audit notices, per Taxually. A deficiency notice states that the state believes you underpaid your sales tax and lists the amount owed and the reason for the discrepancy. A proposed assessment is preliminary and signals the state's intent to assess a tax liability.

A delinquency notice means a sales tax return is overdue or a payment was late. An overpayment notice means you paid too much and may be due a refund. An audit notice is different in kind: it means the state will examine your business records to verify compliance, not just your numbers, according to Taxually.

How do I tell a real notice from a routine one?

Start by matching the notice to the period it covers. Pull the return you filed for that period and compare the state's figures against your own before doing anything else.

Then determine whether the notice reflects a math or filing error the state made or a position you actually took on a return. The first is usually a phone call. The second is a decision about whether to defend, adjust, or concede the position.

Check whether the notice is a request for information, a proposed change, or a final demand. The response window and the consequences differ for each, according to Taxually. Confirm the notice is genuinely from the state agency and matches your registration details before responding. A notice that does not match your records still requires action, but verification comes first.

What are the biggest mistakes business owners make after a notice arrives?

Paying the full amount immediately to make the notice go away is a common mistake. It can close off the adjustment or appeal path before you know whether the state's position is correct.

Ignoring the notice because the amount looks wrong or small is another. Delinquency and assessment timelines keep running whether or not you agree with the notice, according to Taxually.

Calling the state before reviewing your own filings can create a problem. An answer given on the record that does not match your books becomes part of the file. Assuming a notice for one state means the other states you sell into are fine is also risky. A nexus problem is rarely confined to one jurisdiction, and notice and report obligations vary by state, per TaxJar.

What happens if I do not collect sales tax in a state where I have nexus?

Nexus is the connection between your business and a state that lets that state require you to collect its sales tax. The Quill v. North Dakota case once limited that to physical presence, and the landscape changed after that precedent was unsettled, according to TaxJar.

Economic thresholds now bring remote sellers into registration requirements. Florida, for example, requires out-of-state sellers with more than $100,000 in total sales into the state in the prior calendar year to register, per the Florida Department of Revenue.

Some states with notice and report laws require non-collecting retailers to tell buyers that use tax may be owed rather than collect it. Eleven states have such laws, and only six attach a penalty for failing to comply, according to TaxJar. Colorado's version requires a transactional notice at purchase, an annual purchase summary to each customer by January 31, and an annual customer information report to the state by March 1, with per-sale penalties that cap out.

The exposure is not one notice. It is every period you should have been registered, in every state where you crossed the line.

Can I handle a sales tax notice myself, or should I get help?

Notices that are clerical are usually resolvable directly with the state. A missed filing, a payment posted to the wrong period, or a refund you are owed falls into that category, according to Taxually.

Get help immediately when the notice is a proposed assessment, an audit notice, or covers multiple periods or multiple states. The response becomes the record the state relies on, and a poorly framed response is hard to unwind. States offer formal paths for unpaid balances, including installment payment agreements, voluntary disclosure and compliance programs, and offers in compromise, per the New York State Department of Taxation and Finance. Which path fits depends on the facts.

Spencer Accounting Group handles multi-state sales tax notice work as Sales Tax Resolution, covering nexus review, exposure quantification, voluntary disclosure, and getting current with each state. The work is done virtually, so no office visit is involved. If the underlying problem is unfiled returns rather than a single notice, Back Tax Return Filing sequences the catch-up work to reach compliance with the least disruption.

How long do I have to respond, and what deadlines actually matter?

The response deadline printed on the notice is the one that governs. Missing it can convert a proposed assessment into a final one, according to Taxually.

Filing and payment due dates vary by state and by filing frequency. States publish their own calendars, and the current dates for the tax year should be confirmed rather than relying on a prior year's schedule, per the New York State Department of Taxation and Finance. Some states require electronic filing for most taxpayers, so a paper response may not be the right channel.

Notice and report obligations carry their own calendar. Colorado's customer summaries are due January 31 and the state report is due March 1, both for the prior year, according to TaxJar. Deadlines shift year to year; confirm them for the current tax year.

How do I keep this from happening again?

Reconcile sales by state on a schedule, not once a year. A threshold crossing becomes visible when it happens rather than after a notice arrives, which matters in states like Florida where the prior-year sales figure determines registration, per the Florida Department of Revenue.

Keep registration, filing frequency, and address details current with each state so notices reach you, according to Taxually. Where you have nexus, the tax position should be designed rather than discovered. Strategic Tax Planning builds around where the business is heading.

Clean monthly books make a notice response a lookup instead of a reconstruction. Bookkeeping keeps that record current year round. Filing obligations across states are handled through Tax Filing, prepared and filed through a secure portal from anywhere.

Key Takeaways

References

  1. Sales and use tax - Tax.NY.gov, New York State Department of Taxation and Finance, last reviewed or updated March 27, 2026.
  2. Understanding sales tax notices, Taxually, modified October 9, 2024.
  3. Sales tax by state: use tax notice and report laws, TaxJar, published November 21, 2025.
  4. Florida Sales and Use Tax, Florida Department of Revenue.

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