If you`re a business owner in New York State, you may be familiar with the Voluntary Disclosure Agreement (VDA) program. This program is designed to encourage businesses to come forward and disclose any unreported taxes they owe, in exchange for certain benefits. Here`s everything you need to know about the New York State VDA program.
What is a Voluntary Disclosure Agreement?
A Voluntary Disclosure Agreement is an agreement between a business and a state tax authority, in which the business voluntarily discloses any unreported taxes or other liabilities. In exchange for their honesty, the state agrees to waive penalties or interest that might otherwise apply. The goal of the VDA program is to encourage businesses to come forward and make amends, rather than waiting for the state to discover the errors and imposing fines.
What are the benefits of participating in the New York State VDA program?
If your business participates in the New York State VDA program, you can enjoy several benefits:
– Waiver of penalties and interest: If you owe back taxes, penalties and interest can quickly add up. By participating in the VDA program, you can avoid these fees and save your business money.
– Lookback period: Under the VDA program, the state will only look back three years for unreported taxes. This means you won`t be penalized for taxes you may have missed several years ago.
– Reduced audit risk: If your business discloses unreported taxes voluntarily, you`re less likely to be audited in the future. This can save you time and resources down the road.
Who is eligible for the New York State VDA program?
Most businesses are eligible for the VDA program, including those that have not yet registered with the state. However, there are a few exceptions. For example, businesses that are currently under audit or have been contacted by the state about their tax liability are not eligible for the program.
How do you participate in the New York State VDA program?
To participate in the VDA program, you must submit a written request to the state tax authority. The request should detail the specific taxes or liabilities you wish to disclose. If the state approves your request, you`ll be required to submit all necessary documentation and pay any back taxes owed within 90 days.
In conclusion, the New York State VDA program can be a useful tool for businesses that want to come clean about unreported taxes. By voluntarily disclosing any liabilities, businesses can avoid penalties and interest, reduce audit risk, and save time and resources in the long run. If you`re interested in participating in the VDA program, be sure to consult with a tax professional to ensure you follow all the necessary steps.