Voluntary Disclosure - Multistate Programs

Multistate voluntary disclosure programs provide an opportunity for businesses and individuals with unresolved state tax obligations to voluntarily submit past-due information and clear overdue tax debts. In return for coming forward voluntarily, taxpayers can receive valuable financial benefits and avoid risks of further liability.

Attorneys in our Voluntary Disclosure & Multistate Programs Practice strategically navigate the voluntary disclosure landscape to ensure taxpayers efficiently resolve their outstanding tax liabilities. We assist taxpayers in analyzing and selecting the best forum for resolving their state tax debts. Our attorneys have extensive experience operating as an intermediary in both the direct-to-state process and the indirect Multistate Tax Commission (MTC) process.

We also have specific experience in assisting taxpayers in multistate voluntary disclosure processes related to both pre-acquisition due diligence reviews and post-closing escrow and indemnity agreements.

Is a Voluntary Disclosure Program Right for You?

Disclaimer
**Hodgson Russ LLP’s services are limited to legal services. The firm does not undertake any responsibility to perform services that are ordinarily performed by an accountant, such as preparing or filing original or amended tax returns.

Eligibility

To qualify for a Voluntary Disclosure Agreement (“VDA”), taxpayers generally cannot be under audit or have been contacted previously by the state’s tax department regarding the taxes they hope to disclose.

Registered taxpayers may still be eligible for a VDA in certain states, while even ineligible taxpayers may qualify for other special accommodations.

Anonymous applications provide opportunities to confirm eligibility.

Confirm whether your state allows for voluntary disclosure and anonymous applications.

Benefits

If taxpayers choose to voluntarily come forward, they have the opportunity to gain multiple benefits.

Benefits can include:

Civil-penalty waiver (including possible penalty waiver in cases of collected but unremitted sales and use tax)
No criminal prosecution
Limited lookback that can eliminate historic tax debts
Full compliance
Clean credit history

Confirm VDA benefits in your state.

Eligible Tax Types

Eligible tax types covered by most states’ voluntary disclosure programs include:

Personal Income Tax
Withholding Tax
Corporate Franchise/Income Tax
Sales and Use Tax (including collected but unremitted tax in certain states)
Local Taxes

Multistate Tax Commission

The Multistate Voluntary Disclosure Program (“MVDP”) allows taxpayers with potential tax liability in multiple states to negotiate a settlement by using a uniform procedure coordinated through the National Nexus Program of the Multistate Tax Commission (“MTC”).

Advantages to the MTC’s program include a streamlined application and registration process. The program, however, excludes several states, and there is often a lack of direct contact with the state-specific voluntary disclosure representatives.

We assist taxpayers in analyzing and selecting the best forum for resolving their state tax debts, and have extensive experience operating as an intermediary in both the direct-to-state process and the indirect MTC process.