Why You May Receive Notices for Taxes Kintsugi Didn't Register You For

When Kintsugi registers your business for sales tax in a state, that registration or the taxable presence (nexus) it represents can automatically trigger obligations for other tax types in that state, even though Kintsugi only registers and handles sales tax. This can result in notices, filing requirements, or registrations for taxes like franchise tax, business income tax, or gross receipts tax.

This article explains why this happens and what to do about it.

Why does this happen?

Sales tax registration is often processed through a state's central business registration system. In many states, that system is shared across multiple tax types. Registering for sales tax can:

• Automatically enroll you in other taxes administered by the same agency

• Establish that your business has nexus in the state, which independently triggers other tax obligations

• Alert the state's revenue department that you're conducting business there, prompting outreach about other filings

These other taxes are outside Kintsugi's scope. Kintsugi is responsible only for your sales tax compliance.

States where this commonly occurs

The examples below illustrate some of the most common states and tax types where this occurs. This is not an exhaustive list; many other states have tax structures that can create similar downstream obligations. The specific taxes that apply to your business will depend on your entity type, revenue, and the nature of your activity in each state. When in doubt, consult a tax advisor.

California - Franchise Tax / Income Tax

California's sales tax is administered by the California Department of Tax and Fee Administration (CDTFA), while franchise and income taxes are administered by the California Franchise Tax Board (FTB). These are separate agencies.

However, having a sales tax nexus in California is often evidence that your business is "doing business" in California, which independently triggers an obligation to register with the FTB and pay the minimum annual franchise tax ($800/year for most entity types) plus any applicable income tax. The CDTFA and FTB may share data.

What to do: If you have California sales tax nexus, confirm with your tax advisor whether you also need to register with the FTB and pay the California franchise/income tax.

Illinois - Business Income Tax

Illinois administers sales tax through the Illinois Department of Revenue, which also oversees the state's business income tax. Establishing sales tax nexus in Illinois can signal to the Department of Revenue that your business has Illinois-sourced income subject to the corporate income tax (or personal income tax, for pass-through entities).

What to do: If you have Illinois sales tax nexus, confirm with your tax advisor whether your business also has an Illinois income tax filing obligation.

Kentucky - Corporation Income Tax

Kentucky imposes a corporation income tax on the net income of corporations doing business in the state. Registering for Kentucky sales tax can signal to the Department of Revenue that your business has Kentucky-sourced income, which may trigger a review of your corporation income tax obligations.

What to do: If you receive a Kentucky corporation income tax notice, consult your tax advisor to determine whether your business has a Kentucky income tax filing obligation.

Ohio - Commercial Activity Tax (CAT)

Ohio's Commercial Activity Tax (CAT) is a gross receipts tax that applies to businesses with Ohio nexus and over $150,000 in Ohio-sourced gross receipts. Sales tax registration and CAT registration are separate, but the nexus determination is similar. If you have Ohio sales tax obligations, you likely have CAT obligations as well.

What to do: Register for the CAT with the Ohio Department of Taxation if your Ohio gross receipts exceed the threshold.

Tennessee - Business Tax

Tennessee's business tax applies to businesses with Tennessee taxable nexus that make sales of tangible personal property or certain services within the state. Because the nexus standard for business tax closely mirrors that for sales tax, establishing sales tax nexus in Tennessee typically means you also have business tax obligations.

The business tax is administered by the Tennessee Department of Revenue and is filed separately from sales tax.

What to do: Determine whether your Tennessee sales activity subjects you to business tax and register with the Tennessee Department of Revenue if required.

Tennessee - Franchise Tax

Tennessee imposes a franchise tax on the net worth (or property, whichever is greater) of corporations and other entities doing business in the state. The franchise tax is separate from Tennessee's business tax and is administered by the Tennessee Department of Revenue. Establishing sales tax nexus in Tennessee can indicate to the Department of Revenue that your business has a taxable presence there, potentially triggering franchise tax obligations as well.

What to do: If you receive a Tennessee franchise tax notice, consult your tax advisor to determine whether your business is subject to the franchise tax and what filing obligations apply.

Texas - Franchise Tax

The Texas Comptroller administers both sales tax and the Texas franchise tax (also called the margin tax). When your business registers for Texas sales tax, it signals to the Comptroller that you are "doing business" in Texas, which is the same standard that triggers franchise tax liability for most entity types (LLCs, corporations, LPs, etc.).

You may receive a franchise tax registration notice or be included in the Comptroller's franchise tax system after your sales tax registration is processed.

What to do: Confirm your franchise tax status with the Texas Comptroller and ensure annual franchise tax reports are filed, even if no tax is owed (a "No Tax Due" report is still required for many businesses).

What Kintsugi covers and what it doesn't

Kintsugi manages your sales tax compliance: registration, calculation, filing, and remittance. The taxes described in this article, including franchise tax, B&O tax, business income tax, and gross receipts tax, are outside Kintsugi's scope and are not filed or remitted on your behalf.

If you receive a notice from a state about a tax type that Kintsugi didn't register you for, that does not mean an error was made. It most likely means the state has identified your business as potentially subject to those additional obligations due to your taxable presence there.

What to do if you receive a notice

1. Don't ignore it. State tax notices have response deadlines, and missing them can result in penalties.

2. Identify the tax type. The notice will specify which tax it relates to (e.g., franchise tax, B&O tax). This helps determine what filing or payment may be required.

3. Contact your accountant or tax advisor. Kintsugi's support team can confirm what Kintsugi registered you for, but your accountant is best placed to advise on obligations outside of sales tax.

4. Contact Kintsugi support if you're unsure whether the notice relates to a sales tax registration Kintsugi made on your behalf.

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