Kansas Sales Tax Penalties & Interest Checklist
If you operate a business in Kansas or make taxable purchases or sales, sales tax affects you directly. Kansas sales tax is a transaction tax collected at the point of purchase on most goods and some services, including tangible personal property and certain labor services. Penalties and interest are charges the Kansas Department of
Revenue adds to unpaid sales tax or late-filed returns.
Understanding how Kansas sales tax penalties and interest work matters because they increase the amount owed beyond the original tax due. The longer a sales tax debt remains unpaid or unfiled, the more these charges accumulate, making the total obligation significantly larger. This checklist explains what penalties and interest are, why Kansas applies them, what happens if they are ignored, and the specific steps to take if you receive a notice or discover an unfiled return or unpaid liability.
What This Issue Means
Sales tax penalties are charges Kansas applies when a business fails to file a return on time, pays tax late, or underreports taxable sales. Interest is a charge calculated monthly on unpaid tax amounts. Both are added to the original tax owed, increasing your total debt to the state.
A notice from the Kansas Department of Revenue explaining penalties and interest means the state has identified a filing or payment problem and is formally charging you for it. This notice requires prompt attention to prevent further accumulation of charges and potential enforcement action by the Kansas Department.
Why the State Issued This or Requires This
Kansas imposes penalties and interest to encourage timely filing and payment under the Kansas Retailers' Sales Tax Act. These charges are a standard administrative tool used across all tax types. The state applies them automatically in most cases when deadlines are missed, regardless of intent or hardship.
Penalties typically apply when sales tax returns are filed late or when taxes are paid after the due date. Interest accrues monthly on unpaid tax balances from the original due date until paid. The specific penalty percentage and interest rate are set by Kansas
Statutes and applied in accordance with the state tax rules established under Chapter
79 of Kansas law.
What Happens If This Is Ignored
If a notice of penalties and interest is ignored, the state may continue to add interest to the unpaid balance. The Department of Revenue may pursue collection through liens, wage garnishment, or other enforcement actions.
Ignoring correspondence from the state does not stop penalties or interest from accumulating. The longer the debt remains unaddressed, the larger the total amount owed becomes. Additional enforcement costs may also be added to your account, and in severe cases involving willful violations, fines and imprisonment may be imposed under Kansas law.
What This Does NOT Mean
Receiving a penalty and interest notice does not mean criminal charges have been filed against you. It does not automatically imply your sales tax license will be revoked or your assets will be seized immediately. The state has not yet filed a tax lien on public record unless a separate lien notice was received.
A penalty notice is an administrative action, not a court judgment. It represents the state's calculation of charges owed for late filing or payment, which you have the right to address or dispute through proper channels.
Understanding Kansas Sales Tax Penalties and Interest
For tax years ending after January 01, 2002, Kansas imposes a penalty of 1% of the unpaid tax balance for each month or fraction of a month that the failure to file or pay continues, not exceeding 24% in the aggregate. However, in field audit situations where a state return was filed, and all tax was paid pursuant to that return, the penalty is limited to 1% per month, not exceeding 10% of the unpaid tax balance.
Interest accrues on unpaid taxes from the original due date until paid. The interest rate changes annually based on the federal Internal Revenue Code calculation method specified in K.S.A. 79-2968. For 2026, the annual interest rate is 8%, which equals
0.67% per month, or a fraction thereof, as published under KSA 79-3615(d). Interest is
calculated monthly, not daily, and is computed on the tax amount only, not on penalties.
If the Secretary of Revenue determines that the underpayment was due to the taxpayer's failure to make a reasonable attempt to comply with Kansas sales tax law, the penalty may be increased to 25% of the unpaid balance. If a fraudulent return is filed with the intent to evade tax, a 50% penalty may apply under Kansas retailers' sales tax provisions.
Checklist: What to Do After Receiving This or Identifying
This Issue
Step 1: Locate and Review the Official Notice
Find the notice from the Kansas Department of Revenue. Read the entire notice from beginning to end. Write down the notice date, reference number, and amount due.
Identify the tax period, filing period, and type of tax (retailers' sales tax, Consumer's
Compensating Use Tax, etc.). Check whether the notice addresses penalties, interest, or both.
Step 2: Verify the Information on the Notice
Confirm your business name and address match your records. Check the tax period listed against your business records maintained under your Kansas seller's permit or
Business Tax Registration. Review the tax amount shown and compare it to your filed return or records.
Verify the calculation appears correct based on your knowledge. Note any discrepancies or questions about the amount, including whether the penalty rates match the statutory requirements.
Step 3: Determine Whether the Return Was Filed
Check your business records for filed sales tax returns. Confirm which periods you filed returns for and which you did not. Gather copies of any returns you filed during the period in question, including any amended return submissions.
If unsure whether a return was filed, note the specific tax period affected. Document which periods may be unfiled or missing from your books or records.
Step 4: Gather Required Documents
Collect all sales records for the tax period shown on the notice. Obtain copies of filed returns and any payment receipts. Find bank statements showing sales tax payments made using electronic payment systems or other methods.
Gather invoices, receipts, and transaction records for retail sale transactions. Keep records organized by tax period and filing due dates.
Step 5: Contact the Kansas Department of Revenue
Locate the phone number or mailing address on the notice. Call the sales tax division or the number listed on your notice during a business day. Explain that you received a penalty and interest notice.
Ask for clarification on which periods are unfiled or underpaid—request information about payment options or relief procedures. Ask whether a payment plan is available.
Take notes on the name, date, and content of your conversation with Department of
Revenue staff.
Step 6: Review the Penalty and Interest Calculation
Identify the penalty percentage applied to your account under the failure to file penalties or failure to pay penalties provisions. Understand whether the penalty is for late filing, late payment, or both. Ask whether the state offers penalty relief procedures for reasonable cause.
Note the exact penalty amount listed on the notice. Confirm the interest rate applied to your unpaid balance (0.67% per month for 2026). Understand that interest is calculated monthly, not daily, and continues to accrue until the balance is paid.
Verify the time period for which interest was charged. Ask whether interest will continue to accrue after the notice date and what the current total balance is.
Step 7: Determine Your Filing Status
Confirm whether all required sales tax returns have been filed for your filing period.
Identify any missing returns that need to be filed, including quarterly returns if applicable. Determine whether unfiled returns contributed to the penalty.
Check whether returns were filed, but payment was not made. Document the status of each affected tax period and whether you maintained proper books or records as required by Kansas law.
Step 8: File Any Outstanding Returns
Obtain the correct sales tax return form for Kansas from the Department of Revenue website or tax forms section. Gather all sales data and transaction records for unfiled periods. Complete the return form accurately with all required information.
Calculate the sales tax owed for each unfiled period. Prepare to submit unfiled returns to the state promptly to stop further penalty accumulation.
Step 9: Calculate the Current Amount Owed
Add the original tax amount, penalties, and interest shown on the notice. Confirm this is the total amount due as of the notice date. Understand that additional interest may have accrued at the monthly rate since the notice date.
Contact the state to confirm the current total if time has passed. Document the exact amount you need to pay, including any additional charges.
Step 10: Explore Available Relief Options
Ask the Kansas Department of Revenue about penalty relief or abatement for reasonable cause. Kansas law allows the Secretary of Revenue to waive or reduce penalties when the failure to comply was due to reasonable causes.
Inquire whether the state offers installment payment plans—request information about any available compliance programs. Take detailed notes on available options and eligibility requirements for penalty and interest relief.
Step 11: Make Payment or Arrange a Payment Plan
Determine the payment method the state accepts, including electronic payment systems. Decide whether to pay the full amount or request a payment plan. If requesting a payment plan, ask about the application process and requirements.
Submit payment or payment plan request to the address or method specified. Keep proof of payment or plan acceptance for your records.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 12: Maintain Ongoing Compliance
Set reminders for future sales tax return due dates based on your filing period (monthly, quarterly returns, etc.). File all future returns on time and in full. Pay all sales tax collected on time.
Track all sales and taxable transactions for future periods. Keep detailed records of all filings and payments to prevent future penalty and interest charges under Kansas retailers' sales tax requirements.
What Happens After This Is Completed
After filing outstanding returns and arranging payment or a payment plan, the Kansas
Department of Revenue will process your submission. The state will send a confirmation notice showing the remaining balance or payment plan status.
If a payment plan is arranged, the state will notify you of the payment schedule and due dates. Regular monitoring of your account and compliance with future deadlines helps
prevent additional penalties and interest from accumulating. Maintain copies of all correspondence and payment confirmations for your records.
Common Mistakes to Avoid
Missing response deadlines allows interest to continue accumulating at the monthly rate. The longer a debt remains unaddressed, the more interest accumulates.
Responding to notices promptly helps prevent further action.
Filing returns with incorrect sales amounts or missing information can trigger additional penalties. Ensure all data is accurate and complete before submission. Maintain proper books or records to support your reported amounts.
Failing to pay or arrange a payment plan may result in enforcement action. Contact the state promptly to arrange payment or establish a plan to avoid liens or garnishment.
Ignoring follow-up notices from the state about unpaid amounts or collection actions can escalate enforcement. Respond to each notice to prevent escalation and additional charges.
Not keeping records of payments makes disputes over payment history difficult to resolve. If a payment is made, keep proof of the transaction and the Department of
Revenue's confirmation.
Continuing to file late after receiving a penalty notice may result in additional penalties.
Establish a process to file all future returns on time based on your assigned filing due dates.
Assuming penalties will be automatically removed simply because a payment is made is incorrect. Penalty relief must typically be requested through a specific process based on reasonable cause as defined by the Secretary of Revenue.
Frequently Asked Questions
Can Kansas sales tax penalties be removed or reduced?
Kansas law allows the Secretary of Revenue to waive or reduce penalties when the failure to comply was due to reasonable causes. Contact the Kansas Department of
Revenue directly to request penalty relief and explain your circumstances.
How long does interest continue to accrue?
Interest continues to accrue on unpaid balances until the full amount is paid. Interest is calculated monthly (not daily) at 0.67% per month for 2026 under K.S.A. 79-2968.
What is the penalty percentage for late filing in Kansas?
For tax years after January 01, 2002, Kansas applies a penalty of 1% per month, up to a maximum of 24%, under KSA 79-3615(d). For field audit situations where returns were filed and paid, the maximum penalty is 10%.
How do I know if a return was filed on my behalf?
Contact the Kansas Department of Revenue with your Business Tax Registration information or Kansas seller's permit number. The state can confirm which returns have been filed for your account.
What happens if I cannot afford to pay the full amount?
The state may offer payment plan options. Contact the Kansas Department of Revenue to discuss installment arrangements or other payment methods available to taxpayers.
How long do I have to respond to the notice?
A: Response deadlines vary depending on the type of notice. Check the notice for specific instructions or deadlines. If no deadline is stated, contact the Kansas
Department of Revenue for clarification.
Do these penalties apply to other Kansas taxes?
Similar penalty and interest provisions apply to other tax types administered by Kansas, including the Consumer's Compensating Use Tax and other taxes listed under Chapter
79 of the Kansas Statutes. Each tax type may have specific penalty rates.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement and are unsure how to respond, our team can help you understand your options and next steps.
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