Common Myths About Sales Tax Filing—Debunked

posted on June 19, 2025

Navigating the world of sales tax filing can feel overwhelming—especially when misinformation clouds the facts. Let’s set the record straight by debunking common sales tax misconceptions that continue to trip up even the most well-meaning taxpayers.

Myth 1: Only large businesses need to worry about sales tax filing.
Not true. Whether you’re a small business, independent contractor, or freelance artist, sales tax obligations may still apply. Artist tax filing tipsoften overlook this vital step, but understanding where you have nexus and your collection duties is key.

Myth 2: If I receive a Form 1099-K, I must pay sales tax on the entire amount.
False. While IRS Form 1099-K reports gross transactions, it doesn’t reflect expenses, refunds, or tax-exempt sales. Knowing the IRS Form 1099-K facts can prevent costly misreporting.

Myth 3: Renewable energy credits aren’t transferable.
Think again. With the rise of renewable energy tax credits, many don’t realize these credits are transferable, and can offset tax liabilities when transferred properly. Understanding the tax credit transfer processhelps you capitalize on available incentives.

Myth 4: Filing late or incorrectly means you’re automatically penalized.
While accuracy is crucial, many states offer grace periods or amnesty programs. Clarifying sales tax errors early can soften penalties and preserve your standing.

Don’t let outdated assumptions derail your compliance. By clearing tax misconceptions, you empower your financial future—one myth at a time.