Exactly How Are Tax Monies Collected/Disbursed From Retailers?

I was curious how retailers pay the local and state entities their taxes on sales, and how often they pay them.

Do they have to run a report of revenue and calculate what they owe at the end of every year, much like us, or do they pay more frequently?

I’m wondering how that all shakes out.

In New York, sales taxes have to be tabulated and paid every quarter. Typically this isn’t terribly difficult. You have all your sales receipts which show how much sales tax you charged all your customers, so just add them up. Sounds like a good job for a computer.

However, back when I was running my own business, I never sold any taxable products, so I always left that section blank (I was doing consulting).

I figured it was something along those lines. I was getting a couple things at Kroger’s today after work and I noticed I paid 2 bucks on a 20 dollar purchase, and I thought that when a retailer that large collects all that tax revenue, that it would be a huge pile of cash.

So I suppose, to take this further, that there is some kind of percentage breakdown to determine how much tax money goes to state versus city versus local, etc?

In Illinois, we’re required to pay sales taxes monthly. You just fill out a tax form either online or on paper and send it in.

In our various businesses we always filed quarterly. With an efficient bookkeeper this wasn’t too much of a hassle.

Here in California I have to fill out a form on a quarterly basis and mail a check.

I understand that stores above a certain threshold of dollars coming in have to report and remit monthly.

So it seems pretty uniform thus far.

I think I can even file them online now, but I prefer paper for anything related to taxes tbh.

Here’s a link (PDF) to the WI sales & use tax return. Basically you tally up your sales, calculate the state and county taxes and other taxes, and send it in. I pay sales tax annually on my tiny tiny jewelry business (and none on my copyediting business); other businesses pay quarterly. I don’t think there’s a monthly option, but I could be wrong. The state tells you how often you have to pay.

Calculating my sales tax is a bit squirrelly because I don’t add it on to my prices (I sell only at outdoor festivals, and who wants to do the math and deal with coins under an EZ-Up? Not me); I reverse it out. So a $10 item is really something like $9.53, plus $0.47 tax (or whatever). And if I happen to be in a county where the tax is 0.55% instead of 0.5%, the actual computed price is a little less because the tax is more. It’s pennies and I don’t really care. Neither does the state, as long as I post a sign saying that sales tax is included in the price. Or so I understand. Then when I get home, I let Excel do the math.

Does anyone know how once the dollar amount in question is determined that the business has to pay is broken down into state/municipality/library/etc payouts?

How is the breakdown determined? I’ll assume it varies from state to state as state taxes also vary. Who and how determines what percentage of sales tax goes to the city instead of the state? Or to a “local” tax instead of the city?


In CA, it is all sent to the State, AFAIK, but the rate depends on your County, etc, and the Board of Equalization sends off their shares.

"4. What tax rate do I use?

The sales and use tax rate varies statewide. The statewide sales and use tax rate is currently 7.25 percent. However, the rate is higher in locations where voters have approved additional "district" taxes. Most of these districts encompass an entire countywide area; however, some districts are limited to a single city. District taxes may be used for special services such as transportation or libraries, or they may be used to support general services.


    * In San Bernardino County the tax rate is 7.75 percent. This rate reflects the 7.25 percent statewide base rate plus 0.50 percent for the San Bernardino County Transportation Authority. The rate applies countywide.
    * In the City of Placerville, located in El Dorado County, the tax rate is 7.50 percent. This rate reflects the 7.25 percent statewide base plus 0.25 percent for a public safety district. The 7.50 percent rate applies only within the city limits of Placerville. The tax rate in areas of El Dorado County outside the City of Placerville is 7.25 percent.

More than three-fourths of all businesses in the state are located in or do business in special tax districts.

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  1. How do I know if I am required to report district taxes?
As a seller, you must collect, report, and pay district sales tax (called a transaction tax) or use tax on your taxable sales and leases if you:

As a seller, you must collect, report, and pay the district sales tax (called transaction tax) or use on your taxable leases if you:>

    * Have a business location or are engaged in business within the district;
    * Lease, store, or consume tangible personal property in the district; or
    * Sell or lease vehicles, undocumented vessels, or aircraft that will be registered in the district.

You are engaged in business in a district if you are a retailer who:

    * Maintains, occupies, or uses any type of office, sales room, warehouse, or other place of business in the district, even if it is used temporarily, indirectly, or through an agent; or
    * Has any kind of representative operating in the district for the purpose of making sales, making deliveries, or taking orders; or
    * Receives rental income from leases or tangible personal property located in the district.

There are some differences between the rules that apply to the payment of taxes in districts and the payment of sales and use taxes in general. You should refer to Publication 44, Tax Tips for District Taxes, for more information.

If you are not subject to a district tax, you should report tax at the statewide rate, which is currently 7.25 percent.

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  1. How can I find out where special tax districts are located:?
There are several sources of information, including the following:

    * The information is included with your sales and use tax return.
    * You can read Publication 71, California City and County Sales and Use Tax Rates, which provides a detailed listing of applicable rates.
    * You can call our Information Center during working hours and speak to a representative at 800-400-7115."

I pay Wisconsin Sales Tax monthly and “Expo Tax” quarterly.