After sales tax nexus determinations have been made, state registrations are needed to formally collect and remit sales and use tax. Registration forms require a company to disclose when it began doing “doing business” in the particular state(s), and, if the company has been operating in that state for a long period of time, a Sales Tax Voluntary Disclosure Agreement (VDA) may be necessary.
What is a Voluntary Disclosure Agreement (VDA)?
A Voluntary Disclosure Agreement (VDA) is an opportunity for businesses to report any unpaid taxes they owe. It lets you voluntarily disclose what you owe to the state while limiting lookback periods and generally waiving penalties during tax reviews. This allows businesses to clear up any tax issues before the state finds out on its own, helping you avoid bigger problems down the line.
It’s important to note that not all businesses need to enter a voluntary disclosure agreement. Hence, an in-depth analysis of your company’s unreported or underreported tax liabilities is necessary before moving forward.
Contact our Voluntary Disclosure Agreement (VDA) Experts
TMTY’s Voluntary Disclosure Agreement (VDA) Services
The sales tax experts at TMTY can assist you with the voluntary disclosure process by providing the following services:
- Analysis of tax paid and audit status
- Exposure analysis and tax mitigation guidance
- VDA negotiation of the look-back period
- Abatement of reduction in penalties
- Payment remittance
- Registration in relevant states
Benefits of Filing a VDA
Companies that owe unpaid sales and use taxes over a long period can benefit greatly from entering into a VDA, and TMTY can assist you through the entire process with our expert guidance and negotiation skills. Voluntary disclosure agreements can protect your business by:
- Addressing tax liabilities proactively before the state initiates an audit
- Reducing the risk of future audit assessments
- Avoiding hefty penalties and reducing interest on unpaid taxes
- Limiting a look-back period to the past three to four years
- Registering your business in relevant jurisdictions for future taxes
- Saving time and money compared to an audit or delinquent tax examination
Contact Us for VDA Services
Don’t wait until the state finds out you owe back taxes. A VDA could save you significant penalties if acted upon early — set up a consultation with TMTY’s team of sales tax professionals.
FAQs: VOLUNTARY DISCLOSURE AGREEMENTS (VDAs)
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