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Preparing For A Sales Tax Voluntary Disclosure Program: Best Practices And Strategies

Voluntary disclosure programs stand as important points of resolution for businesses navigating potential sales tax and state income tax non-compliance issues. Understanding the nuances of these programs is crucial for enterprises seeking to rectify their tax affairs. In this article we’ll focus on voluntary disclosure agreements (known as “VDAs” in the state tax arena) as they relate mostly to sales tax and state income tax. Note that each state has its own process for engaging in these remedies and there is no “one-size fits all” although there are similarities among the programs.

We’ll cover some of those nuances here:

1. Understanding Voluntary Disclosure Programs:

2. Risks of Non-Compliance:

Overview:
Explore risks related to non-compliance, emphasizing proactive mitigation.
1. Audits and Investigations:
Non-compliance increases the risk of time-consuming audits as happens when a state identifies a company as non-compliant before the company is able to come forward voluntarily
2. Financial Penalties:
Non-compliance leads to financial penalties and interest.
3. Legal Actions:
Non-compliance may escalate to legal actions.
4. Reputational Damage:
Non-compliance can harm a business’s reputation.
5. Loss of Business Opportunities:
Non-compliance limits opportunities.
6. Unpredictable Financial Impact:
The financial impact of non-compliance is unpredictable.

3. Benefits of Participation:

Written by Monika Miles | Posted in Sales And Use Taxes • Voluntary Disclosures

According to the IRS, the US loses several billions of dollars every year as a consequence of individuals who either hide or fail to report their offshore revenue or foreign earnings. Offshore tax fraud or tax evasion is a crime if it is determined to have been committed willfully and one can face certain penalties or even jail time as imposed by the IRS. It is important to note that the IRS conducts civil audits to determine whether or not you are hiding your offshore income, revenue and filing false tax liabilities.

The IRS requires individuals with offshore accounts, investments, assets, and income to accurately report them and on time. Failure to do so results in penalties by the IRS which can be quite severe depending on the value hidden from taxation. In recent years the Internal Revenue Service alongside the United States government has prioritized the disclosure of offshore and foreign money and assets. Those that willfully choose not to comply or through ignorance do not do so become penalized in ways unique to their crimes and falsifications respectively.

Written by Kat Jennings | Posted in Voluntary Disclosures