Sales & Use Tax Foundations (Part 10) – Penalties

Sales Tax Foundation Series

Part X: Basic Questions and Answers about State Sales and Use Tax: Civil and Criminal Penalties

In our last blog, Part IX: Basic Questions and Answers about State Sales and Use Tax: Returns and Payments, we focused on the ninth of our foundational sales and use tax topics — tax refunds and credits, aimed primarily at the nontax specialist, who is often challenged by the complexities of sales and use taxation. In this blog, we ask and answer a basic question about the topic — what are the civil and criminal penalties for sales and use tax noncompliance?

Civil and Criminal Penalties — In General

Question 1:  What are the civil and criminal penalties for failure to comply with sales and use tax rules?

Civil Penalties.  All state statutes provide for basic civil (dollar amounts) penalties on late filing, late payment, or nonpayment of tax.  The actual amounts vary with each state and must be researched (see below).

Criminal Penalties.  All state statutes provide for criminal penalties with respect to sales and use tax noncompliance.  Some violations of the sales and use tax law are misdemeanors punishable by a fine of not less than and not more than a certain dollar amount, as well as imprisonment for a certain amount of time, or both. As in the case of civil penalties, the actual amounts and time of imprisonment vary with each state and must be researched (see below).

Hmmm… Perhaps deploying tools and working with Sales & Use Tax experts is

a good way to avoid penalties. SalesTax.com/CCH SureTax

 

Sale and Use: Civil and Criminal Penalties—State-Specific Rules

Chart One:  Civil Penalties—Failure to file a tax return and failure to pay a tax

This chart describes the civil penalty for failure to file a return.  
Jurisdiction Failure to File Citation
Alabama Greater of 10% of tax due or $50. Ala. Code §40-2A-11(a)
Arizona 4.5% of tax due per month or fraction (maximum 25%). Ariz. Rev. Stat. §42-1125(A) and (B)
Arkansas 5% of tax due per month or fraction (maximum 35%). Ark. Reg. GR-84
California 10% of tax due. Cal. Rev. & Tax. Code §6591(b)
Colorado Greater of 10% of tax due plus 0.5% of tax due per month (maximum 18%) or $15. Colo. Rev. Stat. §39-26-118(2)
Connecticut Greater of 15% of tax due or $50. Conn. Gen. Stat. §12-416(a)
District of Columbia 5% of tax due per month or fraction (maximum 25%). D.C. Code Ann. §47-4213(a)(1)
Florida 10% of tax due (minimum of $50). Fla. Stat. §212.12(2)(a)
Georgia Greater of 5% of tax due or $5 per 30 days (maximum 25% or $25). Ga. Code Ann. §48-8-66
Hawaii 5% of tax due per month or fraction (maximum 25%). Haw. Rev. Stat. §231-39((b)(1)
Idaho Greater of 5% of tax due per month (maximum 25%) or $10. Idaho Code §63-3046(c)(1), (f), and (g)
Illinois 2% of tax due (maximum $250). 35 ILCS 735/3-3
Indiana 10% of tax due. Ind. Code §6-8.1-10-2.1
Iowa 10% of tax due. Iowa Code §421.27(1)
Kansas 1% of tax due per month or fraction (maximum 24%). Kan. Stat. Ann. §79-3615(d)
Kan. Stat. Ann. §79-3706(e)
Kentucky Greater of 2% of tax due per 30 days or fraction (maximum 20%) or $10. Ky. Rev. Stat. Ann. §131.180(1)
Louisiana 5% of tax due per 30 days or fraction (maximum 25%). La. Rev. Stat. Ann. §47:1602(A)(1)
Maine Greater of 10% of tax due or $25. Me. Rev. Stat. Ann. tit. 36, §187-B(1)
Maryland No penalty for failure to file by due date Md. Code Ann. §13-708(a)
Unofficial department guidance
Massachusetts 1% of tax due per month or fraction (maximum 25%). Mass. Gen. Laws ch. 62C, §33(a)
Michigan 5% of tax due if filed within two months and additional 5% of tax due per month or fraction after two months (maximum 25%). Mich. Comp. Laws §205.24(2)
Minnesota 5% of tax due. Minn. Stat. §289A.60(2) and (5a)
Nevada 10% of tax due. Nev. Rev. Stat. §360.300(4)
Nevada Tax Commission Website
New Jersey $100 plus 5% of tax due per month or fraction (maximum of 25%). N.J. Stat. Ann. §54:49-4
New Mexico Greater of 2% of tax due per month or fraction (maximum 20%) or $5. N.M. Stat. Ann. §7-1-69(A)
New York 10% of tax due for the first month plus 1% per month or fraction (maximum 30% and minimum of $50), if the return is late by 60 days or less. N.Y. Tax Law, §1145(a)(1)
TB-ST-805
North Carolina 5% of tax due if the failure is for not more than one month, with an additional 5% for each additional month, or fraction (maximum 25% in aggregate) or $5, whichever is greater. N.C. Gen. Stat. §105-236(a)(3)
North Dakota Greater of 5% of tax due per month or fraction (maximum 25%) or $5. N.D. Cent. Code §57-39.2-18(1)(b)(1)
Ohio Greater of 10% of tax due or $50. Ohio Rev. Code Ann. §5739.12(D)
Ohio Rev. Code Ann. §5739.133
Oklahoma 25% of tax due if not filed within 10 days after written demand. Okla. Stat. tit. 68, §217(E)
Pennsylvania Greater of 5% of tax due per month or fraction (maximum 25%) or $2. 72 P.S. §7266(a)
Rhode Island 10% of tax due. R.I. Gen. Laws §44-19-14
South Carolina 5% of tax due if the failure is for not more than one month, with an additional 5% for each additional month or fraction of the month(maximum 25%). S.C. Code Ann. §12-54-43(C)
South Dakota Greater of 10% of tax due or $10. S.D. Codified Laws §10-59-6
Tennessee Greater of 5% of tax due per 30 days or fraction (maximum 25%) or $15. Tenn. Code. Ann. §67-1-804(a)(1)
Texas Greater of 5% (plus additional 5% if more than 30 days late) or $1. Tex. Tax Code Ann. §151.703
Utah Greater of 10% of tax due or $20. Utah Code Ann. §59-1-401(1)
 
Vermont 5% of tax due per month or fraction (maximum 25%). Vt. Stat. Ann. tit. 32, §3202(b)(1)
Washington Assessment penalty applies – 5% of tax the department has determined to be due, increased to 15% if not paid by the date in the notice, and increased to 25% if not paid by 30 days following the due date in the notice (minimum $5). Wash. Rev. Code §82.32.100
Wash. Rev. Code §82.32.090(2)
Wash. Admin. Code §458-20-228(5)
West Virginia 5% of tax due per month or fraction (maximum 25%). W. Va. Code §11-10-18(a)(1)
Wisconsin 5% of tax due per month or fraction (maximum 25%). Wis. Stat. §77.59(9)
Wis. Stat. §77.60(2)
If return not filed and DOR estimates tax, penalty is 25% of estimate. Wis. Stat. §77.60(4)
Wyoming $10 ($25 if not filed within 30 days of notice to file). Wyo. Stat. Ann. §39-15-108(c)(xiii)

 

 

Jurisdiction Failure to Pay Citation
Alabama 10% of tax due. Ala. Code §40-2A-11(b)
Arizona 0.5% of tax due per month or fraction (maximum 10%) Ariz. Rev. Stat. §42-1125(D)
Arkansas 5% of tax due per month or fraction (maximum 35%). Ark. Reg. GR-84
California 10% of tax due. Cal. Rev. & Tax. Code §6591(a)
Cal. Rev. & Tax. Code §6597
Colorado Greater of 10% of tax due plus 0.5% of tax due per month (maximum 18%) or $15. Colo. Rev. Stat. §39-26-118(2)
Connecticut Greater of 15% of tax due or $50. Conn. Gen. Stat. §12-419(a)
District of Columbia 5% of tax due per month or fraction (maximum 25%). D.C. Code Ann. §47-4213(a)(2)
Florida 10% of tax due (minimum of $50). Fla. Stat. §212.12(2)(a)
Georgia Greater of 5% of tax due or $5 per 30 days (maximum 25% or $25). Ga. Code Ann. §48-8-66
Hawaii Up to 25% of tax due. Haw. Rev. Stat. §231-39(b)
Idaho 0.5% of tax due per month (maximum 25%). Idaho Code §63-3046(c)(2) and (g)
Illinois 2% of tax due if paid within 30 days; 10% of tax due if paid after 30 days but within 90 days; 15% of tax due if paid after 90 days but within 180 days; 20% of tax due if paid after 180 days. 35 ILCS 735/3-3
Indiana 10% of tax due. Ind. Code §6-8.1-10-2.1
Iowa 5% of tax due. Iowa Code §421.27(2)
Kansas 1% of tax due per month or fraction (maximum 24%). Kan. Stat. Ann. §79-3615(d)
Kan. Stat. Ann. §79-3706(e)
Kentucky Greater of 2% of tax due per 30 days or fraction (maximum 20%) or $10. Ky. Rev. Stat. Ann. §131.180(2)
Louisiana 5% of tax due per 30 days or fraction (maximum 25%). La. Rev. Stat. Ann. §47:1602(A)(2)
Maine 1% of tax due per month or fraction (maximum 25%). Me. Rev. Stat. Ann. tit. 36, §187-B(2)
Maryland Up to 10% of tax due. Md. Code Ann. §13-701
Md. Code Ann. §13-709(a)
Massachusetts 1% of tax due per month or fraction (maximum 25%). Mass. Gen. Laws ch. 62C, §33(b) and (c)
Michigan 5% of tax due if paid within two months and additional 5% of tax due per month or fraction after two months (maximum 25%). Mich. Comp. Laws §205.24(2)
Minnesota 5% of tax due per 30 days or fraction (maximum 15%). Minn. Stat. §289A.60(1)(e) and (5a)
Missouri 5% of tax due. Mo. Rev. Stat. §144.250(2)
 
Nebraska Greater of 10% of tax due or $25. Neb. Rev. Stat. §77-2708(c)
Nevada Up to 10% of tax due. Nev. Rev. Stat. §360.417
New Jersey 5% of tax due. N.J. Stat. Ann. §54:49-4
New Mexico Greater of 2% of tax due per month or fraction (maximum 20%) or $5. N.M. Stat. Ann. §7-1-69(A)
New York 10% of tax due for the first month plus 1% per month or fraction (maximum 30%). N.Y. Tax Law, §1145(a)(1)
TB-ST-805
North Carolina 10% of tax due subject to a $5 minimum. N.C. Gen. Stat. §105-236(a)(4)
North Dakota Greater of 5% of tax due or $5. N.D. Cent. Code §57-39.2-18(1)(b)(2)
Ohio Greater of 10% of tax due or $50. Ohio Rev. Code Ann. §5739.12(D)
Ohio Rev. Code Ann. §5739.133
Oklahoma 10% of tax due if not paid within 15 days of delinquency. Okla. Stat. tit. 68, §217(C)
Pennsylvania 3% of tax due per month (maximum 18%). 61 Pa. Code §35.2(b)(2)
Rhode Island 10% of tax due. R.I. Gen. Laws §44-19-12
South Carolina 0.5% of tax due for first month, additional 0.5% per each additional month or fraction of month (maximum 25%). S.C. Code Ann. §12-54-43(D)
South Dakota No provisions.
Tennessee Greater of 5% of tax due per 30 days or fraction (maximum 25%) or $15. Tenn. Code. Ann. §67-1-804(a)(1)
Texas Greater of 5% (plus additional 5% if more than 30 days late) or $1. Tex. Tax Code Ann. §151.703
Utah Greater of 2%, 5% or 10% of tax due or $20. Utah Code Ann. §59-1-401(2)
Vermont 5% of tax due per month or fraction (maximum 25%). Vt. Stat. Ann. tit. 32, §3202(b)(3)
Virginia Greater of 6% of tax due per month or fraction (maximum 30%) or $10. Va. Code Ann. §58.1-635(A)
Washington 9% of tax due, increased to 19% if not paid by end of month following due date, and increased to 29% if not paid by second month following due date (minimum $5). Wash. Rev. Code §82.32.090(1)
West Virginia 0.5% of tax due per month or fraction (maximum 25%). W. Va. Code §11-10-18(a)(2)
Wisconsin 5% of tax owed per month or fraction (maximum 25%). Wis. Stat. §77.60(4)
Wyoming 10% of tax due. Wyo. Stat. Ann. §39-15-108(c)(i)

 

 

Chart Two:  Criminal Penalties—Misdemeanors and felonies

Sales and Use Taxes  >  Administration  >  Penalties  >  Criminal  >  Intent to Evade
This chart lists criminal penalties for filing a false or fraudulent return. Civil penalties may also apply.
Jurisdiction Intent to Evade Citation
Alabama Felony. Up to $100,000 ($500,000 for a corporation) fine and/or imprisonment for up to 3 years. Ala. Code §40-29-115(a)
Arizona Class 5 felony. Ariz. Rev. Stat. §42-1127(B)
Arkansas Class D felony. Class C felony if attempt to evade. Ark. Code Ann. §26-18-201
Ark. Code Ann. §26-18-203
California Misdemeanor. $1,000 – $5,000 fine and/or imprisonment for up to 1 year. Cal. Rev. & Tax Code §7152
Felony if intent to evade and unreported tax exceeds $25,000 in 12-month period. $5,000 – $20,000 fine and/or imprisonment for 16 months – 3 years. Cal. Rev. & Tax Code §7153
Cal. Rev. & Tax Code §7153.5
Colorado Class 5 felony. Up to $100,000 ($500,000 for a corporation) and/or imprisonment. Colo. Rev. Stat. §39-26-120
Colo. Rev. Stat. §39-21-118(4)
Connecticut Up to $5,000 fine and/or imprisonment for 1 – 5 years. Conn. Gen. Stat. §12-428
District of Columbia Misdemeanor. Up to $5,000 fine and/or imprisonment for up to 180 days. D.C. Code Ann. §47-4106
Felony if tax exceeds $10,000. Up to greater of 3 times tax or $10,000 and/or imprisonment for up to 10 years. D.C. Code Ann. §47-4102
Florida 1st or 2nd offense involving less than $300 is a misdemeanor; otherwise, 1st, 2nd, or 3rd degree felony depending on the amount of tax involved. Fla. Stat. §212.12(2)(d)
Georgia High and aggravated misdemeanor. Up to $5,000 fine and/or imprisonment for up to 1 year. Subsequent conviction is a felony. Up to $10,000 fine and/or imprisonment for up to 5 years. Ga. Code Ann. §48-8-8
Hawaii Class C felony. Up to $100,000 ($500,000 for a corporation) fine, imprisonment up to 3 years, and/or probation. Intent to evade use tax is a misdemeanor, subject to a fine of up to $2,000, imprisonment for up to one year, and/or probation. Haw. Rev. Stat. §231-36
Idaho Felony. Up to $10,000 fine and/or imprisonment for up to 5 years. Idaho Code §63-3634
Idaho Code §63-3075(c)
Illinois Class 4 felony. Class 3 felony if tax due is $300 or more. 35 ILCS 120/13
Indiana Class D felony. Ind. Code §6-2.5-9-8
Iowa Willful failure: fraudulent practice. Iowa Code §423.40
Attempt to evade: Class D felony.  
Kansas $500 – $10,000 fine and/or imprisonment for 1 – 6 months. Kan. Stat. Ann. §79-3615(h)
Kentucky Class D felony. Ky. Rev. Stat. Ann. §131.445
Louisiana Up to $1,000 fine and/or imprisonment for up to 1 year. Up to $2,000 and/or imprisonment for up to 2 years if tax exceeds $1,000. La. Rev. Stat. Ann. §47:1642
Maine Class D crime. Subsequent offenses are Class C crime. Me. Rev. Stat. Ann. tit. 36, §184
Intent to evade: Class D crime. Class C crime if tax exceeds $2,000 or for subsequent offenses. Class B if subsequent offense and tax exceeds $2,000. Me. Rev. Stat. Ann. tit. 36, §184-A
Maryland Misdemeanor. Up to $10,000 fine and/or imprisonment for up to 5 years. Md. Code Ann. §13-1003
Massachusetts Felony. Up to $100,000 ($500,000 for a corporation) fine and/or imprisonment for up to 3 years. Mass. Gen. Laws ch. 62C, §73(f)
Michigan Intent to defraud/evade: Felony. Up to $5,000 fine and/or imprisonment for up to 5 years. Mich. Comp. Laws §205.27
Knowing violation: Misdemeanor. Up to $1,000 fine and/or imprisonment for up to 1 year.  
Minnesota Felony. Minn. Stat. §289A.63
Mississippi Misdemeanor. Up to $500 fine and/or imprisonment for up to 6 months. Miss. Code Ann. §27-65-85
Missouri Up to $10,000 fine and/or imprisonment for up to 5 years. Mo. Rev. Stat. §144.490
Nebraska Class IV felony. Neb. Rev. Stat. §77-2713
Nevada $300 – $5,000 fine and/or imprisonment for up to 1 year. Nev. Rev. Stat. §372.755
Nev. Rev. Stat. §372.760
New Jersey Disorderly person offense if reckless or negligient. 3rd degree crime if attempt to evade. N.J. Stat. Ann. §54:52-6
N.J. Stat. Ann. §54:52-10
New Mexico Petty misdemeanor, misdemeanor, or 4th, 3rd, or 2nd degree felony depending on the amount of tax involved. N.M. Stat. Ann. §7-1-73
New York Misdemeanor. N.Y. Tax Law, §1817(b)
North Carolina Class 1 misdemeanor. Class H felony if attempt to evade. N.C. Gen. Stat. §105-236
North Dakota Class A misdemeanor. N.D. Cent. Code §57-39.2-18.1
Ohio $100 – $1,000 fine and/or imprisonment for up to 60 days. Ohio Rev. Code Ann. §5739.99(B)
Oklahoma Felony. $1,000 – $50,000 fine and/or imprisonment for 2 – 5 years. Okla. Stat. tit. 68, §241
Pennsylvania Misdemeanor. Up to $2,000 fine and/or imprisonment for up to 3 years. 72 P.S. §7268(a)
61 Pa. Code §35.2(d)
Rhode Island Felony. Up to $10,000 fine and/or imprisonment for up to 1 year. R.I. Gen. Laws §44-19-31
South Carolina Misdemeanor. Up to $5,000 fine and/or imprisonment for up to 1 year. S.C. Code Ann. §12-54-44(B)(6)
South Dakota Class 6 felony. S.D. Codified Laws §10-45-48.1
Tennessee Class E felony. Tenn. Code Ann. §67-1-1440(d)
Texas No specific criminal penalties.
Utah 3rd degree felony. $1,000 – $5,000 fine. Utah Code Ann. §59-1-401(10)
Utah Code Ann. §59-12-117
Vermont Up to $1,000 fine and/or imprisonment for up to 1 year. Up to $10,000 fine and/or imprisonment for up to 3 years if tax evaded exceeds $500. Vt. Stat. Ann. tit. 32, §9814a
Virginia Class 1 misdemeanor. Va. Code Ann. §58.1-636
Washington Class C felony. Wash. Rev. Code §82.32.290(2)
West Virginia Felony. $1,000 – $10,000 fine and/or imprisonment for 1 – 3 years. W. Va. Code §11-9-10
Wisconsin Misdemeanor. Wis. Stat. §77.60(7)
Wyoming Felony. Up to $2,000 fine and/or imprisonment for up to 2 years. Wyo. Stat. Ann. §39-15-108(c)(vi)
Wyo. Stat. Ann. §6-5-303
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AUTHOR

Jerome Nestor

Jerome Nestor, Esq., CPA, MBA-Accounting Information Systems Manager Tax & Accounting North America Wolters Kluwer Mobile: +1 847.312.5671 Email: jerry.nestor@wolterskluwer.com

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