{"id":354034,"date":"2025-03-19T13:03:51","date_gmt":"2025-03-19T18:03:51","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/tax\/tax-problems-audits\/what-to-do-if-your-small-business-has-unpaid-sales-tax.html"},"modified":"2026-02-24T09:38:31","modified_gmt":"2026-02-24T14:38:31","slug":"what-to-do-if-your-small-business-has-unpaid-sales-tax","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/tax\/tax-problems-audits\/what-to-do-if-your-small-business-has-unpaid-sales-tax.html","title":{"rendered":"How To Resolve Unpaid Sales Tax and Protect Your Personal Assets"},"content":{"rendered":"\n
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How To Resolve Unpaid Sales Tax and Protect Your Personal Assets<\/h1>\n\n
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\n By Christie Nicholson, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last reviewed\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Sales tax<\/span> is held by a business owner<\/span> \u201cin trust\u201d for the state. Using the funds for business purposes is a breach of fiduciary duty and exposes the business owner<\/span> to personal liability<\/span>. Unlike other debts, states can hold the owners personally responsible for the sales tax<\/span> funds. However, businesses may be able to proactively report unpaid taxes to avoid penalties.<\/p>\n\n <\/div>\n\n\n\n

Unlike income tax<\/span>, the sales tax<\/span> your company collects from customers never belongs to you. You only hold it in trust for the state. You act as trustee for the state. Spending that money, even to cover your ordinary operating expenses, is considered a serious breach.<\/p>\n

This sort of breach can lead to devastating consequences for both you and your business, including:<\/p>\n