Penalties and interest (P&I) are charges a state adds when a sales tax requirement isn't met on time. This article covers what triggers them, when we cover them and when they're yours, how waivers work, and what to do if you get a P&I notice.
Tax, penalties and interest: what's the difference?
A state balance can have three separate parts:
Tax | Penalty | Interest |
The sales tax you owe for the period | A charge for not meeting a requirement on time, like a late return or bounced payment. It usually stays the same once it's assessed. | A charge on any unpaid balanceāit keeps growing for as long as the tax or penalty stays unpaid. |
Every state sets its own rates and calculation method, and they change. The exact amount is on your state notice or in your state portal.
What triggers penalties and interest
Any of these can lead to penalties and interest:
Situation | What it means |
Late filing | Includes backfilings for past periods that were never filed. |
Missed prepayment | A required prepayment was not made in a state that requires one. |
Amended return | An amended return shows more tax owed than the original return. |
Unregistered activity | You sold in a state before registering there, including when a state audit determines you had nexus before you registered. |
Failed payment | A payment fails due to outdated bank details, a bank rejection, or insufficient funds. A state may also reject the return itself if the payment doesn't go through. |
Unpaid balance | Interest continues to accrue, and some states may add additional fees. |
š“ Keep the bank account you use for tax payments funded, and update your banking details in your dashboard as soon as they change. A failed payment can trigger penalties and get the return rejected.
Who's responsible: us or you?
Responsibility follows whoever caused the issue.
We cover penalties and interest when they're caused by our mistake, or by a delay on our side that was outside your control.
Penalties and interest are yours when they come from:
Situation | When you're responsible |
Activity before Numeral | The penalty or interest relates to periods before you joined Numeral, including backfilings for months that were never filed. |
Auto-Approval Lock | A filing wasn't approved by end of day on the 10th while Auto-Approval Lock was enabled. |
Late rejection | You rejected a filing after the 10th, leaving insufficient time for Numeral to correct and submit it before the state deadline. |
Late or unreported account changes | An amended return is required because you provided manual data too late or made changes to your account mid-cycle without notifying our team. |
What Numeral's guarantee covers
Numeral's guarantee covers penalties and interest caused by an error on our part.
It does not cover every penalty or interest charge on your account, and it never covers the underlying tax owed.
š” Some jurisdictions require penalties and interest to be remitted with the tax payment because the account is in your name, even when Numeral is responsible for the underlying error. If a notice or balance is related to an issue we caused, weāll work directly with the state to resolve it. When the state requires a single payment, weāll wire the necessary funds to cover it.
Can penalties and interest be waived?
States are often willing to waive penalties when there's a good reason. They rarely waive interest.
If we're responsible, we handle it. We pay the interest, make sure every period is filed and paid, and request a penalty waiver from the state for you.
If you're responsible, we don't submit waiver requests on your behalf. Message us and we'll tell you whether a waiver is worth requesting and where to start.
š“ Forward any P&I notice to us through the messaging widget as soon as you get it. Some states only allow 30 or 60 days from the date the penalty is assessed to request a waiver.
š“ States with stricter penalty rules:
Alabama: local jurisdictions set their own penalty and interest rates, not the state. If you have a physical presence there and unpaid past periods, P&I adds up quickly across every locality you owe.
Colorado: waiver requests are due within 30 days of the assessment date. Home-rule cities run their own systems and rules.
Pennsylvania and Maine: waiver requests are due within 60 days of the assessment date.
Washington: allows one penalty waiver per 24-month period.
North Carolina: waives penalties only for a narrow set of reasons, such as a natural disaster, the death of your tax preparer, or a strong compliance record.
Virginia: accepts very few reasons for a waiver.
Texas: can require a security bond after a large failed tax payment.
Where to see penalties and interest
The exact amounts are on the state notice and in your state portal. You can also find P&I estimates and payment details in two other places in your dashboard:
On a filing
Each filing has a payments section below the tax return. Click Show breakdown to see the line items, including Penalty and Interest when they apply.
šµ Penalty and interest marked (Estimated) is our best estimate when you approve the filing. The final amount is set by the state and can be different by the time we complete the payment.
On the Payments page
If the state assesses penalties and interest after a return was filed, it shows on the Payments page as its own row labeled State-assessed penalty & interest, with its status, the date it was paid and a receipt once it's complete. If its status is Action required, the payment still needs to be approved or made. Click it to open the filing and approve it.
To pull your P&I history for your records, filter the Payment records table by jurisdiction, filing or paid date, then click Export CSV or Download receipts. For a full walkthrough of the page, see our article on Tracking and Managing Your Tax Payments.
š¬ Questions? Reach out to our team anytime via the messaging widget in your Numeral dashboard.