New York Unfiled Sales Tax Returns Checklist
Introduction
If your business has not filed a sales tax return with New York State, the Department of Taxation and Finance will identify this gap during its compliance review process. Sales tax is collected on behalf of the state and must be reported regularly, regardless of whether sales occurred or tax was collected.
Unfiled returns create administrative records that trigger notices, penalties, and potential enforcement action. Understanding what this means and the next steps can help you address this issue clearly and systematically.
What This Issue Means
An unfiled sales tax return means that New York State has no record of a required return submission from your business for one or more filing periods. The state tracks registered sales tax vendors and expects regular filings based on your registration assignment. This gap appears in state records as a missing or incomplete filing obligation.
Why the State Issued This or Requires This
New York requires sales tax returns to be filed on a regular schedule, whether monthly, quarterly, or annually, depending on your business volume and prior filing history. The state uses these filings to track tax collection, verify compliance, and maintain accurate business records.
When the state system shows no return received for an assigned period, it flags your account for follow-up. NY DTF follows specific statutory procedures for tax assessments and collection.
After identifying unfiled returns, the state may issue a Notice of Deficiency or assessment.
Taxpayers have 90 days from the notice date to request a conciliation conference using Form
CMS-1-MN or file a Division of Tax Appeals petition using Form TA-100.
What Happens If This Is Ignored
NY assesses specific penalties and interest according to the Tax Law. Late filing penalty is 5% per month, or part of a month, up to 25%. If more than 60 days late, the minimum penalty is the lesser of $100 or the total amount due. Interest is compounded daily with rates adjusted quarterly.
After a tax liability becomes fixed and final, following the expiration or exhaustion of appeal rights, NY DTF may file a tax warrant with the NY Secretary of State and the county clerk. The filed warrant creates a lien against real and personal property. Before serving a bank levy, the state sends Form DTF-978. A levy directs the bank to send funds to the state.
What This Does NOT Mean
Civil sales tax enforcement is entirely separate from criminal prosecution. Criminal tax fraud under New York Tax Law requires proof of willful intent to evade taxes and is prosecuted by district attorneys or the Attorney General, not by DTF.
For sales and use tax, NY may revoke or suspend a Certificate of Authority to collect sales tax for willful failure to comply with Tax Law requirements, such as willfully failing to file a return or pay tax. An unfiled return notice is a filing compliance issue, not a final assessment or judgment.
Checklist: What to Do After Identifying Unfiled Sales Tax
Returns
Step 1: Gather Your Business Records
Locate all records related to sales, purchases, and tax collected during the periods in question.
Collect sales invoices, receipts, or point-of-sale records. Gather tax exemption certificates from customers. Find records of tax paid to vendors if you claim credits. Obtain bank statements showing deposits and customer payments. Locate any prior correspondence from New York
State about these periods.
Step 2: Determine Which Returns Are Missing
Contact the New York Department of Taxation and Finance to identify precisely which filing periods have no record of a return submission. For sales tax matters, call the Sales Tax
Information Center at 518-485-2889 during business hours, typically 8:30 a.m. to 4:30 p.m.
Monday through Friday.
Visit the online portal at tax.ny.gov to verify your filing history. Record the specific unfiled periods, be they months or quarters. Note the filing frequency assigned to your account, whether monthly, quarterly, or annual.
Step 3: Decide Whether to File the Missing Returns or Request Assistance
You have two primary paths forward. You can file the missing returns yourself using the information you gathered. You can contact the state to request forms or discuss options before filing. If filing yourself, proceed to Step 4. If requesting state assistance first, proceed to Step 5.
Step 4: File the Missing Returns
If you choose to file the missing returns, use the appropriate form based on your vendor type and filing method. For most sales tax vendors, file using the online Web File system or the appropriate paper form. Paper filers use the ST-100 series or PrompTax forms, depending on filing frequency.
The specific form depends on your account setup. Electronic filing is mandatory for most vendors. Visit tax.ny.gov to access the filing system or obtain forms. Complete each return using the actual sales and tax figures from those periods. If you cannot locate complete records, file returns based on the best information available and document your estimation methodology.
Sign and date each return. Submit by mail to the address listed on the form, or file electronically if you have an online account. Keep a copy of each return and a record of when it was submitted. Include payment or arrange for electronic payment if tax is owed.
Step 5: Request Forms and Clarification from the State
If you need the state to provide forms or explain what information is needed, contact them directly before filing. Call 518-485-2889 and explain that you have unfiled returns. Request copies of the forms you need for the specific periods. Ask whether the state has estimated tax assessments for those periods. Inquire about payment plan options or whether penalty relief is available. Request written confirmation of what periods are unfiled.
Step 6: Review Any Notices Received
If the state has already sent notices, such as Notices of Deficiency or failure-to-file notices, review them carefully. Read the notice date, the periods covered, and any amounts the state has calculated.
Note the response deadline, generally 90 days from the notice date. Do not ignore the deadline, even if you disagree with the state’s calculation. If you have questions about the notice, call the number listed on it.
Step 7: Address Any Assessed Amounts
If the state has already assessed tax, penalties, or interest, you have options. Pay the full amount shown if you agree. Request a payment plan if you cannot pay in full; online IPA eligibility requires a balance of $20,000 or less and up to 36 monthly payments. For balances greater than $20,000, call 518-457-5434.
If you disagree with an assessment, you have 90 days to request a conciliation conference using Form CMS-1-MN or file a petition using Form TA-100 with the Division of Tax Appeals.
Submit supporting documents, such as sales records, receipts, and exemption certificates, to show what your actual tax liability was.
Step 8: File Going Forward
Once the unfiled returns are addressed, ensure that all future returns are filed on schedule.
Mark your calendar for each filing due date. Set a reminder one week before each deadline. File electronically if possible for faster processing and confirmation. Keep records of all filings and any confirmation notices.
- 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 9: Keep Records of All Actions Taken
Maintain a file documenting everything you do to resolve this issue. Keep copies of all returns filed. Save copies of all correspondence with the state. Retain copies of any checks or payment records. Document phone calls with the date, time, name of the state representative, and what was discussed. Save copies of any notices received and your response to them.
What Happens After This Is Completed
Once you file the missing returns or the state processes your response, your account will be updated to reflect receipt of the filings. The state will then review whether the returns show tax owed and issue a final assessment or approval notice. If tax is owed, you will receive a bill or notice indicating the amount and the due date for payment.
Interest is a charge for the use of money and, in most cases, may not be waived. Penalties may be waived if you show reasonable cause for noncompliance. "Reasonable cause" means circumstances beyond your control prevented compliance despite ordinary care and prudence.
First-time penalty abatement may also be available.
Common Mistakes to Avoid
If the state sends a notice with a deadline, respond by that date. Missing the deadline can result in higher penalties or limit your options for dispute. Always keep a copy of every return you file, along with any confirmation from the state that it was received.
Use actual sales and tax records when filing. If records are incomplete, document your estimation methodology. Do not assume the issue is resolved after filing one return; respond to any additional notices from the state.
Once this issue is resolved, make sure you do not fall behind on future filings. If records are missing or damaged, contact the state to discuss options rather than failing to file. Before proceeding with an assessment payment, please ensure you have a clear understanding of the periods it covers and the amounts included, such as tax, penalties, and interest.
Frequently Asked Questions
How long does the state have to assess tax for periods with unfiled returns?
NY Tax Law generally places a three-year statute of limitations on the right to assert additional tax due, typically three years after your return was filed. A six-year law applies when there is an abusive tax avoidance transaction or when a taxpayer omits 25% or more of income.
No statute applies for periods when a taxpayer failed to file a return, was unable to report federal changes, or filed a false or fraudulent return with the intent to evade tax.
If I file the unfiled returns now, will the state automatically remove penalties?
Penalties may be waived if you show reasonable cause for noncompliance. Reasonable cause is determined by demonstrating ordinary business care and prudence in meeting tax obligations, despite circumstances beyond your control.
First-time penalty abatement may also be available. Request penalty relief by contacting DTF or submitting written documentation. Tax professionals can use an online penalty abatement request.
What if I did not actually owe sales tax during those periods because I had no sales?
You should still file a return showing zero sales and zero tax. A return is a filing requirement separate from a payment requirement. Filing a zero return clears the unfiled status on your account.
Can I file all the unfiled returns at once, or must I file them separately?
You can file them all together or separately. Filing them together is often faster. Make sure each return clearly states which period it covers so the state can process it correctly.
What if I cannot find records for some of the unfiled periods?
Contact the state immediately. File returns based on the best information available and document your estimation methodology. NY may accept reasonable estimates when exact records are unavailable, particularly if you explain the circumstances and provide supporting documentation. For significant gaps, discuss reconstruction options with the department.
Will unfiled sales tax returns affect my personal credit score?
As of April 2018, major credit bureaus no longer include tax liens on consumer credit reports.
Tax warrants remain public records filed with the Secretary of State and county clerks, but do not appear on credit reports. For sales tax, a trust tax, responsible persons may be held personally liable. Responsible person assessments can attach to personal assets regardless of business structure.
How long does it take the state to process filed returns?
NY DTF does not guarantee specific processing timeframes, as processing time depends on case complexity, filing method, and workload. Electronic filings generally process faster than paper filings. You can check account status through Online Services or by calling the Sales Tax
Information Center. Payments may take up to 10 days to post.
If I set up a payment plan, will that stop penalties from accruing?
Under an installment payment agreement, interest continues to accrue on the unpaid balance from the original due date, is compounded daily, and is adjusted quarterly. Penalties are assessed based on specific statutory rates and timeframes; once assessed, penalty amounts do not increase, but they remain part of the balance owed unless abated. Interest continues until the debt is paid in full.
What is the difference between a notice of proposed assessment and a final assessment?
A Statement of Proposed Audit Changes or Notice of Deficiency is an assessment you may appeal within 90 days by filing Form CMS-1-MN or Form TA-100. If you do not appeal or your appeal is unsuccessful, the liability becomes fixed and final. You generally have 90 days to request a conciliation conference or petition for a hearing.
Do I need an accountant or tax professional to file these returns?
No, you can file them yourself if you have the records and understand how to complete the form. If your situation is complex or you are unsure about calculations, consulting a tax professional is an option.
Closing
Unfiled sales tax returns are a compliance issue that the state addresses through notices and assessments. Addressing this proactively by gathering records, contacting the state for clarification, and filing the missing returns will resolve the issue and prevent escalation.
The state expects all registered vendors to file on schedule, but it also provides avenues to address unfiled returns and to request relief in appropriate cases. Taking action now gives you control over the process and clarity about your tax obligations moving forward.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.
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