Why does the amount of a local government’s sales tax distributions vary from month to month?
There are many reasons why the amount of sales tax distributions you receive varies from month to month. Retail sales of certain items may cause monthly distributions to fluctuate. Car sales and sales of building materials, for example, are known to increase with a strong economy and decline during difficult economic times. Businesses that make retail sales of big ticket items such as airplanes or mainframe computers pay large amounts of tax when they make sales, but these types of businesses do not maintain a consistent level of sales from month to month. Most taxpayers file their returns on a monthly basis. However, some businesses qualify to file on a quarterly or annual basis. The distributions in the months of June, September, and December reflect receipts reported by quarterly filers. The distributions in March will reflect your share of receipts by both quarterly and annual filers. Not every taxpayer files on a timely basis. If a taxpayer’s return is not received by the due date, the amount paid will not be included in a current distribution and may “double up” the amount of sales tax from their particular business for the following month. Also, some taxpayers file using accounting periods that are other than monthly. Some accounting cycles are made up of 13 periods of time that cover one year. Before sales tax reform (January 1, 1990), taxpayers who used this accounting method filed 13 returns each year. Now, they file 12 returns with one of the returns reflecting two of their accounting periods. This single return which covers two accounting periods does not occur during the same calendar month each year causing these taxpayers to distort annual month-to-month comparisons. Frequently, the taxpayers who file using this accounting method are major sales tax contributors. Audits completed on accounts, approved overpayments or claims for credit, and payments collected for additional liability also cause variance in distributions. In addition, a retailer may file amended returns either requesting a refund for overpayment of taxes, or paying additional liability. Either of these situations impact monthly distributions. If you need assistance, call us at 217 785-6518.
