Failing to pay Arizona reciprocal sales tax results in penalties. The Arizona Department of Revenue (ADOR) charges interest on unpaid taxes. This interest accrues daily from the original due date. The rate is generally set by state law and can vary. Check the ADOR website for the current rate.
Late Payment Penalties
Besides interest, you’ll also face late payment penalties. These penalties are typically a percentage of the unpaid tax. For example, the penalty might be 10% of the unpaid tax amount, plus the accrued interest. Specific penalty amounts depend on the amount of tax owed and whether this is a first offense or a repeat violation. Penalties can significantly increase the overall tax liability, making timely payment crucial.
Additional Penalties
ADOR may take further action for persistent non-payment. This could include the suspension of your business license or a referral to collections agencies. Collections agencies may pursue legal action to recover the debt, leading to additional fees and court costs. The best way to avoid such problems is to pay your reciprocal sales tax on time and keep accurate records.
