How to Resolve Delinquency Notice for Sales & Use Tax

One of the most stressful notices the IRS sends is a delinquency notice for sales and use tax. Delinquent notices get sent to businesses when records indicate a failure to pay the right amount of funds on time. Retailers in states with sales taxes must report on and pay sales and use tax obligations. But if your company receives a notice indicating delinquency, it's important to immediately check your records, provide proof if the notice is in error, and pay any outstanding taxes that are due.


In this post, we’ll provide a quick guide to learn more about how to resolve a delinquency notice for sale and use tax. 


Steps to Take After Receiving a Delinquency Notice


While it’s crucial to act fast after receiving a delinquency notice, it's even more important to take proper steps and record your actions. Follow these basic steps to resolve delinquency notices:

  1. Review the entire notice: Skim through the notice to get a basic understanding of its type and action items. Then read through the notice thoroughly to gain a complete understanding of its contents. 
  2. Review your records: Notices are occasionally sent in error and may include information that's no longer accurate. Review your company records and see if you have made the required payments or determine if the notice is correct.
  3. Either send proof of payment or payment: Depending on what action is taken, you may either need to send proof to dispute the notice or ensure the funds are sent immediately. Involve the correct contact in your organization based on which next step is the proper fit.
  4. Record actions taken: Note your conclusions and actions taken in a record that your coworkers can access. This record ensures your team can clear up any future notices and see a history of the interactions.


Getting Your Company Back in Good Standing


Paying any remaining taxes to get your company in good standing is essential. Outstanding notices can trigger an audit, lead to fines and penalties, and jeopardize your business's operations. When you owe taxes, there are two courses of action available for how to resolve delinquency notices for sale and use tax: 

      1. Pay the funds in full: If you have the money available but nonpayment was an error, resolve it as quickly as possible.
  1. Set up a payment plan: Contact the IRS and discuss payment plan options. While payment plans are best set up in advance of tax deadlines, the IRS can offer options when you don't have the funds. When you choose this option, work with a tax professional so you can receive support and advice.


Once you resolve the unpaid funds, reach out to your financial team or a tax professional about how to prevent delinquency in the future. Creating a proactive management plan reduces the risk of additional notices and helps you avoid costly risks in handling taxes.


Stay on Top of Notices with Automation Software


A crucial part of any management plan is a robust notice management solution. Automation software can streamline the process of recording notices, involving qualified professionals, and quickly resolve outstanding action items. Specialty tax notice automation software can help your team stay compliant and take the correct steps for every notice.


Our comprehensive notice management software, NOTICENINJA, has robust capabilities to streamline notice management but cutting the necessary time to upload notices to a fraction of what it is manually. The system also has a helpful knowledge base to provide resources and guidance to resolve any notices. It empowers your company’s tax professionals to resolve and respond to notices more quickly – which can be critical if the notice has a short response window. That way, companies can maintain compliance, saving money and preserving their reputation.


Maintain Compliance With NOTICENINJA


NOTICENINJA is a dynamic notice automation platform. Through our platform, you can scan notices, create detailed notice records, and automate tasks so responses don't fall through the cracks.


Reach out today to learn more about NOTICENINJA can help your team respond to tax notices quickly and develop standardized processes that protect your business.