When you collect sales tax from customers, you are holding those funds in trust for the state government. To ensure that this money is always available when it's time to pay your tax bill, Dappr creates Tax Reserve Accounts for you.
This is an automated feature for users who have engaged Dappr to file and remit sales taxes on their behalf. This guide explains what these accounts are, how they are funded, and how to view them.
What is a tax reserve account?
For each state where you use Dappr's automated tax filing and remittance service, we will set up a dedicated Tax Reserve Account. This is a special-purpose financial account designed to do one thing: hold the sales tax you've collected until it's time to remit it to the state.
Each reserve account is assigned its own unique account and routing number. Dappr provides these details to the state tax authority on your behalf, allowing them to debit the account directly for your tax payments.
How tax reserve accounts are funded
Dappr's system is designed to fund your reserve accounts automatically. When you receive payments from outside of Dappr's payment processing system and mark an invoice as paid manually, our system identifies any funds that are from sales where tax was collected. That tax portion is automatically transferred from your main Dappr Financial Account into the appropriate state's Tax Reserve Account.
Dappr will also on a regular basis schedule payouts from your Dappr Sales Balance to the relevant tax reserve account to ensure that there is a sufficient balance available for both remittance of taxes owed and payment of the next filing fee.
This process ensures that your tax money is segregated from your operating cash, so it's always set aside and ready for remittance day.
Important Note on Payout Schedules: If you use an instant payout or request a payout outside of your normal schedule, the tax portion will not be transferred at that moment. Instead, Dappr will fund the reserve account from your Dappr Financial Account on a regular basis to catch up, provided you have sufficient funds.
Viewing your tax reserve accounts
You can view the balance and transaction history for each of your reserve accounts at any time.
From the main menu, navigate to Sales.
Select Balances from the top menu.
Click on the Tax reserves tab in the sub-menu.
Crucial security information
While each tax reserve account has its own account and routing number, you should never use these credentials for any purpose. These accounts are for automated tax payments only. Do not use them to send or receive funds manually. The full account number is generally hidden from view, but if you happen to see it on a statement, do not record or use it.
Canceling Dappr's tax service
If you decide to cancel Dappr's automated tax filing and remittance service for a particular state, the corresponding Tax Reserve Account will be closed after the final remittance for the last active filing period has been successfully made.