Virginia Unfiled Sales Tax Returns Checklist
Introduction
Virginia businesses registered to collect sales tax are required to file sales tax returns for every assigned tax period, even when there are no taxable sales to report. An unfiled sales tax return generally means a required return was not submitted by the due date, creating a compliance issue with the Virginia Department of Taxation, commonly referred to as Virginia tax.
Unfiled sales tax returns can trigger tax bills, civil penalties, interest, and collection activity under
Virginia tax laws. This guide explains what an unfiled return is, why the state requires filing, what happens if the issue is ignored, and how to resolve delinquent returns in an orderly, documented way.
What This Notice Means
A notice regarding unfiled sales tax returns indicates that Virginia’s tax records indicate one or more required sales tax returns were not received for specific tax periods. The issue is related to filing, not just payment, and can exist even when a business believes it has no tax liabilities for that period.
Virginia assigns filing frequency for sales and use taxes, typically monthly or quarterly, based on prior tax liabilities. Returns are generally due on the twentieth day of the month following the close of the filing period. Failure to file by that deadline places the account into delinquent status and may result in delinquent returns being generated internally by the Department of Taxation.
Why the State Sent This Notice
Virginia requires sales tax returns to monitor compliance with state and local taxes and to ensure proper reporting of taxable sales, exempt transactions, and zero filing of return periods.
Filing allows Virginia to confirm that a business is active, inactive, or eligible for account closure.
Notices are often issued when a Virginia tax account number is active, but no return is received through the state’s online business account or Web Upload system. Notices may also be sent when tax bills are generated through a Substitute for Return process, which estimates tax liabilities when a business does not file voluntarily.
What Happens If You Ignore This Notice
Failing to file sales tax returns can increase the cost and complexity of resolving the issue.
Virginia tax may assess late fees, civil penalties, and interest, even for periods where no tax
was due. These amounts can accumulate across multiple tax periods and convert a filing issue into a tax debt.
If delinquent returns remain unresolved, Virginia tax may initiate collection actions, including applying payments to estimated assessments, issuing additional tax bills, or pursuing administrative collection tools. While criminal penalties and fraud penalties are reserved for more serious cases involving tax evasion or fraudulent tax returns, prolonged failure to file increases scrutiny and limits available tax relief options.
Checklist: What to Do After Receiving This Notice
Step 1: Gather and review all Virginia tax communications
The business should collect every letter, notice, or electronic message received from the
Virginia tax and organize them by date. Each document should be reviewed for referenced tax periods, assessment dates, and any listed tax liabilities. Maintaining a complete file prevents missed deadlines and supports later dispute resolution if needed.
Step 2: Confirm registration and filing frequency
The next step is confirming that the business is correctly registered for sales and use taxes and identifying the assigned filing frequency. This information is available through the Virginia tax online systems or by contacting the Department of Taxation directly. Filing frequency determines which tax periods require returns and helps prevent filing the wrong periods.
Step 3: Identify all unfiled tax periods
The business should compare internal records with Virginia’s tax account history to determine which sales tax returns are missing. This includes reviewing prior confirmation receipts, ACH
Debit payment records, and online filing acknowledgments. Creating a chronological list of delinquent returns helps ensure no period is overlooked.
Step 4: Compile sales and exemption records by period
For each unfiled period, the business should assemble sales records, invoices, point-of-sale summaries, and exemption documentation. These records support accurate reporting of taxable and exempt sales, as well as local taxes. Proper documentation is essential if Virginia taxes later questions deductions or identifies badges of fraud.
Step 5: Prepare accurate sales tax return data
Using the compiled records, the business should calculate gross sales, taxable sales, and deductions for each tax period. Applicable state and local sales tax rates must be applied correctly based on the transaction location and tax type. Even when there are no sales, the return must be filed as a zero return rather than left unfiled.
Step 6: Anticipate penalties and interest without guessing totals
Late filing penalties and interest generally apply to delinquent returns, and minimum penalties may apply even when no tax is due. While estimates can help with planning, the business should rely on the posted Virginia tax balances for final payment amounts. Assuming incorrect totals can delay resolution.
Step 7: Contact Virginia tax using the business channel
Before filing older delinquent returns, the business should contact Virginia tax through the business support channel to confirm which periods remain open. The call should include the
Virginia tax account number, listed tax periods, and any tax bills received. This step helps prevent duplicate filings or filing under outdated requirements.
Step 8: File all missing sales tax returns electronically
Virginia generally requires sales tax returns to be filed electronically through the online business account. For periods beginning April 2025, Form ST-1 replaces prior forms used for sales tax returns. Each delinquent return should be filed using the correct method for that tax period and saved with confirmation details.
Step 9: Submit payment or address balances due
After filing, the business should review the updated account to determine any remaining tax debt, including penalties and interest. Payments should be made using Virginia taxes’ approved
Pay Taxes options, ensuring proper identification so funds apply to the correct periods. If full payment is not possible, the business may inquire about Payment Plans.
Step 10: Monitor posting and resolve discrepancies
The business should verify that each filed return posts correctly and that payments are applied as intended. If mismatches appear, prompt follow-up with the Virginia tax is necessary.
Maintaining screenshots, submission IDs, and payment confirmations protects against future disputes.
- 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 11: Implement controls to prevent repeat delinquency
To avoid future failures to file, the business should maintain a filing calendar tied to assigned tax periods, reconcile sales monthly or quarterly, and confirm filings before deadlines. If operations cease, the business must formally update or close its Virginia tax account to stop ongoing filing obligations.
Common Mistakes to Avoid
A frequent mistake is assuming that no sales means no return is required, which leads to repeated delinquent returns. Filing the wrong form for the period, particularly after form changes, can also keep periods open. Businesses often delay filing until funds are available, even though filing sooner can reduce penalties. Another standard error is losing electronic confirmation records, which makes it difficult to prove compliance later.
Frequently Asked Questions
Does an unfiled return always mean tax evasion or fraud?
No, most unfiled sales tax returns result from oversight, system changes, or a misunderstanding of filing status. Fraud penalties apply only when there is intent and supporting evidence, such as fictitious deductions or the uttering of false documents.
Can Virginia tax assess tax when no return is filed?
Yes, Virginia tax may issue estimated assessments through a Substitute for Return process when returns are not filed voluntarily. These assessments often overstate liabilities and should be corrected by filing accurate returns.
Are payment plans available for sales tax debt?
Payment plans may be available depending on the amount owed and compliance status, but filing all delinquent returns is usually required before relief options are considered.
Closing
Unfiled sales tax returns are primarily a compliance issue, but they can quickly develop into tax liabilities and collection problems if ignored. The most effective resolution strategy is to identify all delinquent returns, file them accurately through Virginia’s online systems, and address any resulting balances promptly.
By maintaining consistent filing practices, documenting confirmations, and monitoring account status, businesses can reduce risk, protect eligibility for tax relief programs, and remain compliant with Virginia sales and use tax obligations.
Facing State 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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