Sales Tax Reporting Checklist

Pull the jurisdiction calendar from Avalara or TaxJar. Filing frequency (monthly, quarterly, annual) is set by the state based on prior-year liability and can change without notice — verify each state's current frequency before assuming last period's cadence.

From QBO, Shopify, Amazon, and any other channel, pull gross sales, taxable sales, and tax collected by state and local jurisdiction. Marketplace facilitator sales (Amazon, Etsy, eBay) should be tracked separately — the marketplace remits, but most states still want the gross reported on your return.

Match exempt sales in the period to a valid certificate on file. Expired or missing certificates convert exempt sales into taxable sales on audit — flag any exempt customer without a current certificate for immediate follow-up.

Compare trailing 12-month sales and transaction counts against each state's Wayfair threshold (most are $100K or 200 transactions; some only $100K). Avalara and TaxJar both produce this report automatically. New thresholds crossed since last filing trigger registration before the next return.

Apply for the sales tax permit through the state DOR portal or Streamlined Sales Tax (SST) for member states. Do not collect tax in a state before the permit effective date — most states treat pre-registration collection as misappropriation. If retroactive exposure exists, evaluate Voluntary Disclosure Agreement before filing.

For each state with marketplace sales, confirm whether the facilitator collects on your behalf and whether the state requires the seller to still report gross. A handful of states require a zero-tax informational return even when 100% of sales are facilitator-collected.

Tie the tax-engine report (Avalara/TaxJar) to the sales tax payable account in QBO or Xero. Variance over $50 needs investigation — usually a manual invoice override, a refund posted without tax reversal, or a rate change that hit mid-period.

Common causes: invoices edited after sync, credits applied to a prior period, rate changes effective mid-period, or rounding differences on multi-line invoices. Document the cause and post a reclass JE if needed before filing.

Most states allow a credit for tax remitted on sales later refunded or written off as bad debt. Each state has its own form line and documentation rule — track the underlying invoices in the workpaper so the credit can be defended on audit.

Roughly 25 states offer a timely-filing discount (collection allowance) — typically 0.5%–2% of tax due, capped. Easy to miss; stack of $50/month adds up. Examples: GA, IL, FL, AL, NY all offer some form. Skip if filing late, since the discount is forfeited.

Map gross sales, exempt sales, taxable sales, and tax due to each state's specific form lines. Local jurisdiction breakouts (county, city, special district) are required in CO, AL, LA, AZ home-rule cities — these do not auto-populate cleanly from QBO and must be reviewed line by line.

Reviewer ties total tax due across all jurisdictions to the GL liability, spot-checks two states against source data, and confirms the workpaper supports every credit and exemption claimed. No filing goes out without reviewer initials in the workpaper.

Resolve every reviewer note in the workpaper, re-run the engine totals if any source data changed, and route back for a second sign-off. Do not split a partial filing — all jurisdictions go after the corrected package is approved.

File via Avalara/TaxJar AutoFile where enrolled, or directly through each state DOR portal. States with EFT-mandate thresholds (typical: $10K annual liability) will reject paper or check payment — verify the payment method matches each state's rule.

Confirm bank cutoff time in each state — some require ACH initiation by 4pm ET the business day before the due date to be considered timely. Late-by-one-day still triggers penalty and interest in most jurisdictions.

Save the state-issued filing confirmation and payment confirmation as PDFs in the engagement folder. Confirmation numbers are the only proof of timely filing on audit; a screenshot is not enough.

Debit sales tax payable, credit cash, by jurisdiction. Vendor discount earned posts to other income. Tie the cleared payable balance to zero (or to amounts genuinely owed for unfiled jurisdictions).

States issue rate changes effective the 1st of each quarter. Confirm Avalara/TaxJar rate tables synced and that any new product SKUs are mapped to the right tax category — SaaS, digital goods, and services have state-specific taxability that the default category often gets wrong.

File the sales-by-jurisdiction report, exemption certificate workpaper, reconciliation, signed reviewer package, and filing confirmations in SmartVault or the firm DMS. Sales tax statute of limitations runs 3–4 years in most states, longer if no return was filed — retain at least 7 years.