Full Disclosure: Why VDAs Can Be a Business's Best Friend
State and Local Tax attorney Jennifer Karpchuk co-authored an article for the Pennsylvania Institute of CPAs' (PICPA) CPA Now Blog discussing the benefits of voluntary disclosure agreements (VDAs). Businesses that operate across multiple states must navigate differing tax compliance requirements, and as more states start to use economic nexus as the basis for determining sales tax responsibilities, some taxpayers may find themselves facing unexpected tax obligations – which is where VDAs come in. Generally speaking, VDAs allow companies to voluntarily disclose previously unreported tax liabilities in exchange for a limited look-back period and reduced penalties. Mr. Karpchuk's article reviews the application process and eligibility criteria, most notably that taxpayers cannot not have been previously contacted or audited by a state and that they cannot have previously registered with a state for the type of tax being disclosed, such as corporate taxes. She concludes by outlining the benefits of VDA programs, highlighting this tool as an effective strategy for avoiding costly legal fees while bringing a business back into compliance.
READ: Full Disclosure: Why VDAs Can Be a Business's Best Friend