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Tag Archive for Voluntary Disclosure Agreement

What You Need To Know About Voluntary Disclosure Agreements

What You Need To Know About Voluntary Disclosure Agreements

When it comes to business taxes, compliance is absolutely essential. That said, mistakes happen. When they do, it’s often better for your business to be up front about those potential tax liabilities than keeping silent and hoping for the best. In this blog, we’re weighing the pros and cons of voluntary disclosure agreements (VDAs) and why a business might want to enter into such an agreement with a state.

What Is A Voluntary Disclosure Agreement?

Simply put, entering into voluntary disclosure agreements is about companies identifying their potential state tax exposure (sales tax, income tax, or both) and coming forward voluntarily to pay any outstanding liabilities before the state identifies the company as part of an audit or other outreach effort. As states are becoming more aggressive in their pursuit of out-of-state taxpayers, it’s becoming a bit of an inevitability that businesses with tax liabilities will be found eventually.

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Sales Tax Non-Compliance: What’s Your Exposure

An entrepreneur’s dream is to start her own business and witness it grow. First, she wants to see it grow locally. And then, she may see it grow statewide. Whether the company is a small retail operation or a cutting edge technology company, the next step up may be overwhelming as the business begins to operate across state lines. At that point, there are many strategic and tactical issues including hiring employees or contractors operating in other states, or the maintenance of inventory.

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Voluntary Disclosure Program for Personal Income Tax Rolls through New Jersey

Effective December 3, 2013, New Jersey residents and non-residents may enter into a Voluntary Disclosure Agreement (“VDA”) with the New Jersey Division of Taxation (“Division”) for unfiled personal income tax. The VDA program is not available to anyone who is currently under criminal investigation, has been contacted by the Division for delinquencies or deficiencies, or is attempting to amend a previous individual return.

Requests to enter into a VDA must be in writing and contain the tax years at issue and the reason(s) for not filing. The Division reviews the VDA request and rejects or confirms the taxpayer’s request. When a taxpayer is granted a VDA, the Division waives the late filing and payment penalties for the years covered by the agreement. The taxpayer receives a 5% post amnesty penalty and must pay statutory interest. Upon completing all duties Read more