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. Confidentiality rules are dealt with in voluntary disclosure procedures by several states, paragraphs 6 and 7. The Commission treats the identity of the applicant confidentially during the voluntary advertising procedure. The Commission will not disclose the identity of an applicant to a Member State until the applicant has entered into a VDA with that State. Pending the signing of such a contract, an applicant is known to that state only by his voluntary disclosure, which was granted by NNP staff. The Commission will not disclose the VDA or its conditions to another state. Before executing a VDA, the applicant is not required to disclose information that would reveal his or her identity. Secure emails are available to send confidential taxpayers. NNP employees do not process voluntary disclosure requests if the good faith estimate of the state-based tax is less than 500 $US for the “lookback” period. Taxpayers with a minimum tax obligation should pay this responsibility directly to the state when filing a first return.
A taxpayer with a potential tax burden in more than one state will realize that this service is faster, more efficient and less expensive than approaching each state individually. Participation in the MVDP is not billed to the taxpayer. State revenue/use tax and income/franchise tax (including Hawaii`s GET and Washington`s B-O tax) are the types of taxes that are generally subject to a voluntary disclosure agreement (VDA). Prior contact between a state and the taxpayer through a type of tax disqualifies the taxpayer from participating in voluntary advertising of this type of tax. The “contact” includes filing a tax return, paying taxes or receiving a government request for the type of tax. Multi-state voluntary advertising procedures, paragraph 5.2. When introducing a VDA with the state, the taxpayer is required to file tax returns, pay tax due on tax returns and register with the state (if necessary) in order to waive the penalty for the duration of the return period, as provided by the VDA. Interest on unpaid tax obligations incurred during the feedback period is not expressly waived by the government. VDA transaction agreements are usually handled anonymously through third parties, such as. B interstate tax strategies, for example.
This ensures that the identity of the subject will only be known to the state when the agreement is formalized and all parties agree with the transaction. VDA counts must be done before the state contacts your company, so it is important that you start assessing your company`s potential liability as soon as possible.