Gil Sperling

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Colorado Voluntary Disclosure Agreement

April 8, 2021 by gilsperling

A voluntary disclosure agreement is a legal agreement between a state tax authority and a company that acknowledges that it has not complied with its compliance obligations with respect to sales and usage taxes. The voluntary disclosure agreement will allow the company to make all necessary registrations within the state and fulfill all remaining tax commitments. At the end of the voluntary disclosure agreement program, the company has regular monthly, quarterly or annual reporting obligations with the government based on the volume of government activity. If a company`s voluntary disclosure agreement or VDA is accepted, there are strict deadlines for obtaining all the benefits of the Voluntary Disclosure Agreement program. Keep in mind that a voluntary disclosure agreement is a legal agreement between the company and the state. Therefore, there are very clear results that need to be provided by the company, as well as a rigorous schedule as to when these items should be made available. Like almost everything in revenue and usage tax, these deadlines vary from state to state, but an experienced VAT advisor will know these deadlines and will be assured that his client will meet them. The minimum requirements for each agreement include filing tax returns for each subject as soon as the agreement has been reached. The process begins with the taxpayer and/or their representative downloading and verifying these documents. In voluntary disclosure agreements, most states will allow a company to estimate its past commitments, which will simplify the process. With a few exceptions, Excel calendars for calculating tax liabilities are accepted instead of filing all previous VAT returns. States are prepared to make these concessions to facilitate the process, as the main objective of states is to promote voluntary compliance with future and ongoing tax collection and reporting obligations. In short, the state is prepared to forego some formal revenues and even some to curb new taxpayers.

Keep in mind that there is usually no requirement for a company that has not filed a VAT return. In such cases, the liability for revenue and usage taxes extends to the first day you were considered Nexus in a given state. This may mean the day the first sale was made in the state after the establishment of Nexus. VDA programs vary by land. It is important that the person negotiating these agreements have a thorough understanding of these different programs, including: there are several pitfalls that a company should face when entering into a voluntary disclosure agreement. The subject must come forward and request the VDA from a Member State before receiving requests, communications or audit notices from the State concerned. Some states limit these requests, communications or audit communications to the specific nature of the disclosed tax, while others extend it to all state-administered taxes. This is the most common misunderstanding about voluntary disclosure agreements. The key is that it is a “voluntary” confession… If the state contacts you on its own about certain tax breaches, the state does not see things as you voluntarily register. A well-negotiated voluntary disclosure agreement with a state may limit a company`s commitment to revenue tax and usage and include more favourable terms than standard agreements. If you submit documents for the voluntary disclosure program, please use the address below based on the shipping mode.

Send directly to Samwel Khakame. The email is also accepted. If the taxpayer is liable in more than one state, it may consider requesting voluntary disclosure by several states through the Multistate Tax Commission (MTC). For more information on the MTC Voluntary Disclosure Program and the voluntary disclosure request from several countries, please visit the MTC website.

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