Filing Sales Tax Amidst The SVB Collapse
On Friday, March 10, 2023, Silicon Valley Bank (SVB) was hit with regulatory enforcement actions that marked the second largest US bank failure since the early 2000s Global Financial Crisis. Understandably, this has forced many businesses to reassess their banking relationships and contingency plans. For merchants who bank with SVB, this situation is particularly challenging and may impact their sales tax filing process.
In light of the recent news, we’re sharing everything that you need to know about how the sales tax filing process at TaxCloud will work if you’ve been affected by this event or should your bank become insolvent.
How Does This Affect TaxCloud Customers?
First and foremost, TaxCloud wants to reassure its customers that it has no exposure to SVB. TaxCloud is filing taxes and remitting to states normally.
While this situation is unsettling, regulators have said depositors will have access to their deposits starting Monday, March 13, and have set up a new facility to give banks access to emergency funds. The Federal Reserve has also made it easier for banks to borrow from them in emergencies such as this.
How Does This Affect Silicon Valley Bank Merchants?
For merchants who bank with SVB or whose bank becomes insolvent, there are some important things to know about state sales and use tax. State laws require that all returns be filed in a timely fashion, and if funds are not available, the returns should be filed without payment which will result in an unpaid sales tax liability.
State laws define penalties and interest to be assessed to merchants when late payments occur, but TaxCloud will work with affected merchants to file for an abatement when possible. It may take several weeks or longer to recover penalties that were applied by the state.
TaxCloud will also help retrieve tax remittances as soon as possible and remit that to each state. Returns filed without payment should be adjusted as soon as possible to include the sales tax remittance. Penalties and interest may apply in these instances, but state laws also provide abatement in certain circumstances.
TaxCloud does not assume liability for penalties or interest where a sales tax remittance was not funded in a timely fashion but we expect the unusual nature of this situation will be considered by each state as part of the abatement process.
Moving Forward Together
This is a difficult time for many businesses, and we want to be a partner to merchants through this process. We hope this post helps businesses like yours navigate these challenges and continue to thrive.
Please don’t hesitate to contact support at service@taxcloud.net should you have questions or concerns.
Featured image: Focal Foto