Advocacy Action Center

Prepayment of Sales Tax is Coming – Ask your Legislators to Make it Simple
 As the Legislature moves toward adopting an FY21 state budget, one thing is clear – there will be a new requirement on retailers to make an advanced payment, or prepayment, of sales tax.  Ask your legislators to follow the lead of all the other prepayment states and to make it simple!
In times of immediate need, many states have turned to the prepayment of sales tax as a tool to get a one-time infusion of revenue into state coffers.  Prepayment does not generate “new” revenue, but rather, it provides a one-month boost as vendors submit a portion of tax early, what equates to a down payment on the sales tax the state will receive anyway a few weeks later in the normal course of the filing period. 
Currently, you collect sales tax in one month, April, for example, and remit that tax to the state by May 20thThe plan advancing in the Legislature will require retailers to calculate the sales tax collected in the first 21 days of April, and to make an advanced payment of those actual collections less than four days later to the state, by April 25th.  The remaining collections for the month of April would then be reconciled and remitted to the state by May 30th.  Going forward, you would be required to make two payments per month, your regular monthly filing and remittance and an advanced payment. 
The threshold to qualify for prepayment is $150,000 in annual sales, meals, or room occupancy tax liability.  For a typical retailer, that is $2.4 million in annual taxable sales.  For a restaurant subject to local option meals tax, it’s only $2.15 million in annual sales. 
ALL of the other prepayment states – to simplify this process – provide an option, or safe harbor, for vendors to base the prepayment off of an earlier tax filing, most often, as a percentage of the same month the preceding year.  RAM is asking the Legislature to give retailers this option. 
The Senate is considering this change TODAY, in Amendment #72, Sales Tax Modernization, offered by Asst. Majority Leader Joan Lovely of Salem.  The Lovely Amendment adds this option to the prepayment provision, allowing for a payment to be calculated equivalent to 75% of the full month’s liability in the preceding calendar year.  Taxpayers can easily plan for and calculate this payment based off their past year’s tax remittances. 
Contact your legislators TODAY, and ask them to provide you with this safe harbor to simplify compliance!
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