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Sales Tax Payable: Definition and Meaning
Definition
Sales tax payable is sales tax collected from customers that a business owes to the appropriate taxing authority.
Why It Matters
Sales tax collected is generally not revenue. It is an obligation until remitted. Accurate sales-tax tracking and timely filings can help a business avoid penalties, interest, notices, and cash-flow surprises.
Sales-tax rules vary by jurisdiction and can be complex, particularly for businesses selling across state lines, providing mixed goods and services, or operating through multiple channels. Professional guidance may be appropriate.
Example
A retailer collects sales tax from a customer at checkout and records the amount as sales tax payable until it files and remits the tax.
Related Terms
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