Introduction
A historical (or late) return is an individual tax return for a prior period in which a taxpayer failed to file and remit sales tax to a given jurisdiction. Filing historical returns is a recognized method for addressing historic tax exposure and, similar to a Voluntary Disclosure Agreement (VDA), brings a taxpayer into full compliance with the state by resolving the entirety of sales tax exposure reflected in Anrok. See Overview of Voluntary Disclosure Agreements (VDA).
Key benefits of filing historical returns include:
- Complete tax liability cleanup — A complete cleanup of historic tax exposure and a technically sound position for addressing liability.
- Cost-effective with low exposure — For businesses with limited exposure, historical filings can also be a more cost-effective alternative to pursuing a VDA, while delivering the same outcome: full compliance.
- Less time-consuming coverage option — Generally, less time-consuming than a VDA — you can register and begin collecting sales tax from customers right away, rather than waiting for VDA approval, which could otherwise result in additional out-of-pocket tax expenses during the interim period.
Anrok can register you in all jurisdictions where you want to file historic returns and request that the state open applicable prior periods for filing. Our Filing team can then draft and file all historic returns on your behalf (not applicable to global jurisdictions).
Note
Requesting historical return filings is an enterprise feature available on Anrok’s Growth plan. Please submit this form to upgrade and unlock the full suite of pre-built reconciliation reports.
Historical returns filing process
During the registration process, Anrok will ask if you want to remediate exposure from past filing periods by filing individual tax returns for each missed period (where permitted by the jurisdiction) and remitting all taxes, penalties and interest. If selected, once your registration is complete and Anrok has access to your sales tax account, the requested historical returns will be drafted by our Filing team for you to review in Anrok.
The historical returns will appear on your Returns & payments page with a status. From here, you will have the option to make the following adjustments:
- Edit transactions into and out of returns
- Report marketplace sales on returns
- Report use tax sales on returns
- Manually backfill transactions
Once you've reviewed the historical returns and made the applicable adjustments, they must be manually approved by your team within Anrok. This will involve accepting the "Acknowledgment of historical return payments" disclosure. See below:
Please be advised that the amounts reflected on the returns do not include penalties or interest, as these are assessed directly by the jurisdiction following submission. You will be solely responsible for any penalties and interest arising from late return filings. See Review returns ready for filing.
After the historical returns have been manually approved by your team, Anrok will proceed with filing the returns in the jurisdiction. Historical filings require additional processing time and are estimated to take around 3 to 4 weeks to complete for low-volume historical return requests. For high-volume requests of 100+ historical returns, it is estimated to take 4 to 6 weeks to complete.
Remittance of historical returns
Historical returns are remitted through a different process than standard filings. Rather than Anrok debiting your bank account and remitting payment on your behalf, all historical return payments are debited directly by the jurisdiction. Accordingly, you will need to ensure that any ACH debit blocks are removed from the applicable bank account prior to filing. If a debit block is in place, the relevant jurisdiction ACH IDs must be added to your account's allowlist to authorize payment. See Jurisdiction ACH ID list.
Additionally, in some states, there will be two debits: one for the initial tax due and the second for any penalties and interest, as some states calculate penalties 2-3 business days after filing the return.
Please note that failure to take the necessary steps to enable payment may result in additional penalties and interest being assessed by the jurisdiction. Anrok will not be responsible for mitigating any penalties or interest incurred as a result of a failed payment.