Discover the Benefits of the Statute of Limitations

Let us define statute of limitations...

Before we define statute of limitations, we are often asked for our most important piece of advice. Our answer: if a business is filing for one type of tax, they should file for ALL types, especially sales and use tax. This advice applies to EVERY business. There is a compelling reason for this—it sets the statute of limitations and limits the lookback period. If your business has never filed a sales tax return, there is no limit on how far back the government can look back to assess potential dues. This can lead to increased exposure and a staggering assessment.

Now that we were able to define statute of limitations, lets discuss its' exceptions. Exceptions to this limit can occur if the government suspects gross negligence or fraudulent behavior. Additionally, some states can extend the tax statute of limitations if they believe the tax base was significantly misrepresented.

What is the statute of limitations in my state?

The time limit for the statute of limitations really depends on the state. Most states’ limit of statute of limitations for sales tax is three years. This can be calculated from either the return due date, or the return filing date – whichever comes later. There are some states that differ from the 3 year look back period. Below are some states that have a sales tax state of limitation different from the typical 3 year look back:

Arizona – 4 years

California – 4 years

Nevada – 8 years

Ohio – 4 years

Michigan - 4 years

Help! I never filed a sales and use tax return! What can I do?

First and foremost, when looking for advice, make sure you choose someone who is reputable. Experience is paramount. We know it sounds like a no-brainer. But, plenty of smart people make some dumb mistakes. Make sure you read the article from Forbes, that details a case of fraudulent accounting. The article details how a tax preparer knowingly filed false tax returns for hundreds of businesses. Unfortunately, it was the business owners who were held responsible. The same businesses that trusted their advisor are now facing financial hardship, as not having knowledge of the fraud or error was not an excuse, and they are held responsible for the repercussions of the misdeeds.

Sales Tax Defense LLC can help!

At Sales Tax Defense LLC, we specialize exclusively in sales and use tax. We've witnessed numerous cases where businesses fail to file for sales and use tax, only to find themselves owing substantial amounts to state departments. So, if you're unsure whether you have sales tax obligations in a particular state, contact us at Sales Tax Defense LLC. We have tools to guide you towards a more favorable outcome. We can speak to you more about the statute of limitations meaning, and discuss other tools that are available. For example, there is the Voluntary Disclosure Agreement program, which may allow your firm to limit interest and penalties. Other options include an Offer-in-Compromise and Penalty Abatements. We are here to assist you with all of your sales and use tax needs!