Forgot to File Sales Tax? How to Catch Up

The short answer: If you forgot to file sales tax, act now. Late is better than never: in several states penalties grow the longer a return is late, and interest runs until the tax is paid. But if a voluntary disclosure agreement might suit you, decide that before you register, file or pay in that state. Under the Multistate Tax Commission's program, doing any of those counts as prior contact for that tax in that state, and prior contact rules you out (MTC). This guide walks you through how to catch up.

You are not alone, and this is fixable: many states take part in the Multistate Tax Commission's National Nexus Program, which runs a multistate voluntary disclosure program (National Nexus Program member states), and some states outside it run their own, such as California (CDTFA).

What Happens If You Don't File Sales Tax?

The consequences of unfiled sales tax returns escalate over time:

Penalties — Each state sets its own, and in several they grow the longer you wait (see the table below)
Ongoing interest — Rates and methods vary: New York compounds daily (NY DTF), while Illinois charges "simple interest figured using a daily rate" (IDOR)
Assessment — If you don't file, the state may bill you on its own estimate. Texas sends non-filers "an estimated billing with instructions to file a report providing your actual sales data" (Texas Comptroller)
Collection action — Texas warns that failing to file or pay "may result in collection actions including, but not limited to, additional late filing penalties, liens and criminal charges" (Texas Comptroller)
Permit revocation — California, for example, can "revoke or suspend" a seller's permit after notice and a hearing (CDTFA)

The good news: if you act before the state contacts you, you keep more options open, including voluntary disclosure (Step 2).

Step 1: Figure Out Exactly What You Owe

Before filing anything, get clear on your exposure:

How far back do you need to go?

It depends on the state. New York generally has three years after a return is filed, but that limit "does not apply, however, for any period during which a taxpayer failed to file a return" (NY DTF). Texas's general limit is four years, but it doesn't apply when "no report for the tax has been filed" (Texas Tax Code §111.205). For out-of-state sellers who never registered and owe California use tax, the period is eight years, or three under its voluntary disclosure program (CDTFA). Because an unfiled period may never age out, registering and filing — even late — is the right move.

Which states do you have nexus in?

You owe sales tax only in states where you have nexus — a legal connection that creates a tax obligation. Nexus can be:

Physical nexus: A physical presence, such as "Maintaining inventory or office locations in California" (CDTFA)
Economic nexus: Crossing the state's sales threshold, which varies. Florida's is "taxable remote sales in excess of $100,000 over the previous calendar year" (Florida DOR). California and Texas use $500,000 (CDTFA, Texas Comptroller); New York requires over $500,000 and "more than 100 sales" (NY DTF)

If you've been selling on your own site as well as on Amazon, Etsy or other marketplaces for multiple years, you may have economic nexus in multiple states. Run a nexus assessment before assuming you only owe in one state. Sales made only through marketplaces that collect the tax often don't require you to register: Texas, for example, says a remote seller "who only sells through a marketplace provider that certifies they are collecting and reporting sales and use tax on the remote seller's behalf is not required to hold a Texas tax permit" (Texas Comptroller).

What did you actually collect from customers?

Pull your sales data by state for each unfiled period. If you were collecting sales tax from customers but not remitting it, you owe the state that money — plus penalties and interest. If you were NOT collecting sales tax when you should have been, the tax is generally still owed: Texas tells sellers who don't collect and remit the correct amount that they "can owe any additional tax and may be assessed additional penalties and interest" (Texas Comptroller). Plan on paying it out of pocket.

Step 2: Decide Whether to Use a Voluntary Disclosure Agreement (VDA)

A Voluntary Disclosure Agreement (VDA) is a formal process where you proactively come forward to a state to disclose unfiled returns and pay back taxes before the state contacts you. For the full mechanics, including lookback periods by state, anonymity, and what a VDA won't fix, see our guide to sales tax VDAs. VDAs typically offer:

Limited lookback period — Each state sets its own. On the MTC's chart, many participating states list 36 months for sales tax and some list 48, including Texas (MTC lookback chart)
Penalty waiver or reduction — In the MTC's words, "the state partially or completely waives penalties" (MTC). Texas says "Statutory penalties and interest will be waived, except interest on taxes collected and not remitted" (Texas Comptroller Pub. 96-576)
Interest usually still owed — Under the MTC program, "Interest is due on unpaid tax obligations incurred during the look-back period unless expressly waived by the state" (MTC)
A written agreement, not immunity — A VDA is "a written agreement" (MTC), but the MTC's protection while an application is pending excludes "criminal enforcement activity" (MTC procedures), and Texas says VDA periods "remain open to future audit, within the statute of limitations" (Texas Comptroller Pub. 96-576)

A VDA is worth looking at when:

You have several years of unfiled returns, or a sizeable back-tax bill
You were operating without registering in the state
You haven't had prior contact with the state for that tax. Under the MTC's program, prior contact includes registering, filing a return or paying that tax in that state; a state's own program may set a different test

The Multistate Tax Commission (MTC) runs a Multistate Voluntary Disclosure Program through its National Nexus Program. One application can go to several states, and the Commission "treats the applicant's identity as confidential during the voluntary disclosure process" until you sign with a state. Only National Nexus Program member states take part: the member list includes Texas and Florida but not California, New York, Pennsylvania or Illinois.

For small amounts, a straight late filing may be simpler: MTC staff don't process applications where the estimated tax due to a state "is less than $500" (MTC).

Step 3: Register in States Where You're Not Already Registered

If you have nexus in a state but haven't registered, you need to register before you can file returns.

Most states allow online registration:

California (CDTFA): CDTFA online registration
Texas: Sales Tax Permit Application
New York: Register as a sales tax vendor
Florida: Florida Department of Revenue registration
Multi-state (one application): Streamlined Sales Tax Registration System — for the Streamlined states, which SST lists as 23 full members plus Tennessee as an associate member (SST). "There is no fee to register through the SSTRS," though a state may charge one if you're legally required to register there. Except in amnesty states, registering "does not relieve you of any tax liability you may have relating to prior sales or purchases."

Registration gives you a sales tax account or permit, which you need to file returns. It also starts your filing obligation — going forward, you're on the hook for all future returns, and "Returns must be filed even if you have no sales in that state" (SST).

Step 4: File All Back Returns

Once registered, file every overdue return, using the state's filing system or forms for each missed period. Florida's sales tax return, for example, asks for (Florida DOR):

Gross sales for the period
Exempt sales
Taxable amount and tax due
Any lawful deductions

Pay the tax owed plus any interest. If you think a penalty should be waived, ask, but check the state's conditions first. Texas, for example, "will not grant a waiver unless all reports have been filed and all tax due has been paid" (Texas Comptroller).

Taxero's Forgotten Filer is built for this. You upload your sales data, and Taxero identifies the periods you missed in each state and prepares each past-due return for you to approve. It costs $19.99 per return (Forgotten Filer), "the same price as a current-period return" (Taxero catch-up filing).

Step 5: Set Up Filing Going Forward

Once you're caught up, don't fall behind again:

Know your filing frequency — States assign quarterly, monthly, or annual filing based on your volume; in New York it "depends on the amount of your taxable sales" (NY DTF). Log in to your state account to confirm.
Set calendar reminders — Due dates vary by state. Florida returns are "late after the 20th day of the month following each reporting period" (Florida DOR); New York's quarterly returns are due 20 days after the quarter ends (NY DTF).
Automate where possible — Tools like Taxero monitor your nexus and prepare your returns. On Taxero's Managed plan, Taxero "submits them directly to each state's revenue department on your behalf" (Taxero FAQ).

One busy quarter and one forgotten deadline can put you back in the same spot. Put a system in place for the filing step.

What Are the Penalties for Unfiled Sales Tax Returns?

Each state sets its own penalties, and some penalize late filing and late payment separately while others, such as New York, charge one penalty for either (N.Y. Tax Law §1145(a)(1)(i)). These figures come from each agency's pages as of October 2026; interest rates change, so confirm before you file.

State	Late filing penalty	Late payment penalty	Interest
California	10% of the tax if the return is late	10% if the payment is late; late filing and late payment together are capped at 10% (CDTFA)	IRS rate plus 3 percent, reviewed each January and July; 10% a year for July–December 2026, charged for each month or part of a month (CDTFA)
Texas	$50 for each late report (most taxes), even if no tax is due	5% if 1–30 days late; 10% if more than 30 days late; another 10% (20% total) if paid after the date on a Notice of Tax Due (Texas Comptroller)	Prime rate plus 1%, set each year: 7.75% for 2026, starting 61 days after the due date (Texas Comptroller)
New York	10% of the tax for the first month plus 1% for each further month, at least $50; if more than 60 days late, the greater of that amount (capped at 30%) or the lesser of $100 or the tax due, but at least $50; $50 if no tax is due	If the return was filed on time but the tax wasn't paid: 10% for the first month plus 1% a month, up to 30%. This is the same penalty, not added to the late-filing one (NY DTF; N.Y. Tax Law §1145(a)(1)(i))	14.5% a year, compounded daily, for October–December 2026; adjusted quarterly (NY DTF)
Florida	One penalty of 10% of the tax (at least $50) if the return or the payment is late, or both; $50 even with no tax due	Same single penalty (Florida DOR)	Floating rate, reset January 1 and July 1: 11% for July–December 2026 (Florida DOR)
Pennsylvania	5% of the tax if up to a month late, plus 5% for each further month, up to 25% (at least $2)	Return filed without full payment: the assessment adds 3% of the difference, then, if not paid within 10 days, 3% a month, up to 18% (61 Pa. Code § 35.2)	Annual rate set by calendar year: 7% for 2025–2026 (PA DOR REV-1611)
Illinois	The lesser of $250 or 2% of the tax; 30 days after a nonfiling notice, another penalty of the greater of $250 or 2%, up to $5,000	2% if 1–30 days late; 10% if later; 15% or 20% in audits (IDOR Pub-103)	Simple interest at the federal underpayment rate, reviewed January 1 and July 1: 7% for 2025–2026 (IDOR)

Florida also has a separate penalty of 10% for each 30 days, up to 50%, but it applies to tax not disclosed on a return (Florida Statutes s. 212.12).

Waivers are not automatic. Texas, for example, caps a penalty waiver at "One annual report period, Two quarterly reports or Six monthly report periods" and points sellers with more past-due reports to its VDA (Texas Comptroller).

Can You Get Penalties Waived?

Sometimes. Penalty relief is usually discretionary, and the paths differ by state:

Prior record: Some states weigh your history. Texas asks whether the business has "received a waiver in the past two years" and, if so, says it is not eligible "unless there are extenuating circumstances" (Texas Comptroller). Don't assume a first-time waiver exists; check the state's own rules.

Reasonable cause: California may relieve a penalty for "reasonable cause and circumstances beyond your control," but not for "lack of funds" (CDTFA). New York may reduce or eliminate penalties for "reasonable cause, and not due to willful neglect" (NY DTF), and Illinois wants "a detailed explanation of the cause of the delay" (IDOR). In California, "interest cannot be waived except in cases of disaster."

VDA penalty waiver: As discussed above — a VDA can waive penalties in part or in full (MTC); the tax, and usually interest, is still owed.

Payment plans: "If you cannot pay your total past due amount now, you can request a payment plan," California says (CDTFA). It spreads out what you owe; it doesn't eliminate it.

The Forgotten Filer: A Common Pattern

Here's one way sellers end up behind: a small seller opens an Etsy shop, adds their own online store, grows faster than expected, crosses nexus thresholds in multiple states with those direct sales, and simply doesn't know they have to file — or keeps meaning to deal with it and doesn't.

If this is you, know that:

You're not alone. Falling behind is a known problem with known fixes.
It's fixable. States run programs to bring sellers back into compliance. California, for one, "encourages businesses to voluntarily register and pay use tax obligations" through its voluntary disclosure program (CDTFA).
The sooner you act, the cheaper it gets. Penalties in some states grow monthly — New York's to 30%, Pennsylvania's to 25% (see the table) — and interest accrues on the unpaid tax until you pay.

Taxero built Forgotten Filer specifically for this situation. Upload your sales data, and Taxero works out which states and periods you missed and prepares the returns for you to approve, for $19.99 each (Forgotten Filer).

Frequently Asked Questions

What happens if I forgot to file sales tax for several years? You need to file back returns for all unfiled periods where you had nexus. How far back a state can go varies: New York's usual three-year limit doesn't apply to periods with no return filed. If you haven't registered, filed or paid that tax in the state yet, consider a Voluntary Disclosure Agreement when your exposure is large — it limits the lookback (often 36 or 48 months) and waives penalties in part or in full.

Is it too late to file sales tax after the deadline? No. You can still file late returns, and the earlier you file, the less penalty and interest builds up in states where they grow over time, such as New York. If a VDA might suit you, decide that first: under the MTC program, registering, filing or paying a tax in a state counts as prior contact for that tax in that state.

What if I collected sales tax from customers but never sent it to the state? You owe the state every dollar you collected, plus penalties and interest, and states treat it seriously. A VDA won't cap it: collected tax "must be remitted" in full and "may involve non-waivable penalties" (MTC lookback chart). In Texas, "Intentionally or knowingly failing to remit sales taxes collected" can be prosecuted as a crime (Texas Comptroller). File immediately and pay what was collected.

What if I didn't collect any sales tax — do I still owe? Generally yes, if you had nexus and should have been collecting. Texas, for example, says such a seller "can owe any additional tax" (Texas Comptroller). Expect to pay it from your own funds. This is why filing promptly and collecting correctly from the start matters.

Can a state audit me for unfiled sales tax returns? Yes. A state doesn't need your returns to bill you: Texas sends non-filers "an estimated billing" and can follow it with collection action (Texas Comptroller). Proactive filing gives you far more control than responding to an audit.

Do I need a CPA to catch up on sales tax filings? Not necessarily. For straightforward catch-up situations (1–3 states, clean transaction records, no audit history), Taxero can prepare the returns. Taxero doesn't represent you in an audit, and for complex situations with significant back-tax exposure, multi-entity structures, VDA negotiations, or ongoing disputes with states, a CPA or sales tax consultant adds real value.

Catch Up on Your Missed Sales Tax Returns

Taxero's Forgotten Filer product handles exactly this situation. Upload your sales data, let Taxero identify the periods and states you missed, and review each return it prepares — $19.99 per return.

Start catching up at taxero.ai →

Stop letting unfiled returns grow into a bigger problem. Start today.

This article is for informational purposes only and does not constitute tax advice. State laws vary significantly. For complex back-tax situations, consult a licensed CPA or sales tax attorney.

This article is for general informational purposes only and isn't tax advice. Sales tax rules vary by state and change often — consult a qualified tax professional about your specific situation before acting on anything here.

I Forgot to File Sales Tax — Here's How to Catch Up (Without Panic)