Voluntary Disclosure Agreements Your Business Partner for All Things Sales Tax

Voluntary Disclosure Agreements

A Voluntary Disclosure Agreement (“VDA”) is an effective tool for businesses that have fallen behind in collecting sales tax in states they should have, collected sales tax but failed to remit it, or discovered past sales tax liabilities in a state(s). By entering into a VDA with a state(s) your company can pay past liabilities to become compliant, eliminate excessive lookback periods, reduce or eliminate civil and criminal penalties and sometimes even interest. At Sales Tax Helper, our team of lawyers, CPAs and former sales tax auditors has developed tools and tailored solutions for businesses of all sizes and has extensive experience handling VDAs nationwide.

Why Enter Into a VDA

Wayfair Laws – Most states have enacted Wayfair laws in 2019 & 2020. With 3- or 4-year audit cycles, states have been aggressively auditing out of state companies.

More Aggressive Tax Positions – On audit, states often take aggressive positions on questionable transactions. VDAs allow your business to call the shots, disclose the correct amount of tax, and significantly reduce audit risk.

Significant Tax Savings – VDAs reduce tax liability but creating a limited lookback period and taxes beyond that period are forgiven. Most states also offer penalty and interest savings which increases savings.

Tax Collected Not Remitted – Most states’ VDA programs allow for the disclosure of taxes collected but not remitted, which results in large penalty savings and negates criminal liability.

Choose the Right Level of HELP for Your Needs

We understand that every business is unique, which is why we offer flexible tiers of service designed to match your specific sales tax Voluntary Disclosure Agreement (VDA) needs. Whether you’re a small startup handling taxes on your own or a large multi-state enterprise needing a tailored solution, our service levels ensure you get the exact amount of support you require.

DIY (Do-It-Yourself) Tools

Ideal For:

Businesses with sales up to $1M
Operating in 1 state

Why DIY?
Perfect for small businesses or startups wanting to take control of sales tax with expert-designed tools and resources.

What You Get:

Access to expert-designed resources: Comprehensive VDA forms library, instructional videos, and detailed guides.
Form completion: Complete the applicable state forms using our library.
Direct filing: Finalize, download, and file the VDA form directly with the state.
Review & finalize agreements: Review and finalize the VDA agreement with the state.
Liability disclosure & payment: Disclose your liability, file any necessary returns, and pay the liability (optionally using our Sales Tax Return Service).

Guided Support

Ideal For:

Businesses with sales of $1M–$3M
Operating in up to 3 states

Why Guided?
Best for businesses that can handle the VDA process but want occasional support from seasoned professionals to answer questions and provide guidance.

What You Get:

Access to expert-designed tools: Same comprehensive library of forms, videos, and guides.
Form preparation & review: Complete the forms yourself, then have them reviewed by our sales tax professionals.
Direct filing: Finalize, download, and file the VDA form with the state independently.
Agreement review: Upload your VDA agreement to receive tailored advice and finalize details with the state.
Liability disclosure & payment: Disclose your liability, file necessary returns, and handle payments directly with the state.

Fully Managed Services

Ideal For:

Businesses with sales of $3M–$5M
Operating in 3–5 states

Why Fully Managed?
Designed for businesses seeking an end-to-end solution, allowing them to focus on what they do best while our experienced team handles the entire VDA process.

What You Get:

Full access to all DIY tools: Still benefit from our instructional videos and guides.
Expert consultation: Discuss your unique situation with our sales tax professionals.
Form preparation & submission: We prepare and file all necessary forms after your review.
Communication & negotiation: We handle all communication with state revenue agencies, including negotiations and correspondence.
Agreement handling: We receive, review, and file the VDA agreement on your behalf.
Liability disclosure & returns: Our team manages disclosures, files any required returns or registrations, and coordinates payments or payment plans with states.

Enterprise

Ideal For:

Businesses with sales of $5M+
Operating in 5+ states
Complex industries or nationwide reach

Why Enterprise?
Built for larger or more complex operations that need a customized approach. We leverage economies of scale to handle dozens of states simultaneously, and can bundle VDA with other tax services for cost savings.

What You Get:

Tailored strategy: Develop a comprehensive plan to address multi-state (or nationwide) compliance and reduce exposure.
Dedicated expert team: Work with our sales professionals to tackle intricate or high-volume obligations.
Form preparation & submission: We prepare all necessary forms for your approval, then handle filing with revenue agencies.
Ongoing communication: We manage all negotiations, correspondence, and finalize VDA agreements with each state.
Liability disclosure & payment: We handle disclosures, registration filings, payment coordination, and provide any additional state-specific support required.

How Our VDA Programs Work

Regardless of which tier you choose, our process is simple and tailored to your business’s needs. Unlike competitors who offer a one-size-fits-all approach, we provide flexible involvement to ensure your sales tax issues are addressed efficiently.

Discovery & Planning
- Determine the level of assistance you need: DIY, Guided, Managed, or Enterprise.
Resource Access
- All tiers include access to our comprehensive library of DIY tools, including forms, instructional videos, and detailed guides.
Preparation & Filing
- Depending on your tier, you can either complete forms yourself (DIY/Guided) or let our team handle it (Managed/Enterprise).
Review & Finalization
- For Guided: We offer professional reviews and advice.
- For Managed or Enterprise: We take care of negotiations, correspondence, and filing the VDA agreements with states.
Disclosure & Payment
- Disclose your liability, file the necessary returns, pay any outstanding taxes, and coordinate payment plans if needed.
- Our team can handle it all for you or provide support when you need it.

What Is A VDA

As touched on above, most states offer a sales tax VDA program. The VDA program allows a business to electively come forward and settle unreported or collected sales tax that was not properly remitted to the state. In exchange for voluntarily coming forward to pay the tax, the states generally offer from limited look back periods (usually 3-4 years), penalty reduction or abatement, and sometimes interest reduction.

Does Your Business Need to Collect & Remit Sales Tax?

If your business engages in e-commerce in one or more states, you may have established, what is called sales tax nexus with a state, which triggers a collection and remittance obligation. Nexus can be established in two main ways: physical presence or economic nexus.

Physical presence can be established by having something physically in a state. For example, having a location, property, or other physical assets or people in a state can create physical presence nexus. Surprisingly to most businesses, having an independent contractor in a state or having inventory at a fulfilment warehouse often can trigger sales tax nexus and create a collection obligation.

Economic nexus was created to put a similar sales tax obligation on companies that were not physically in a state but engaged in substantial economic activity in a state such that the rules be the same. In short, if your business makes a significant volume of sales into a state (usually over $100k), then it is treated as though it is physically present in that state for sales tax purposes. Many online businesses, sales tax lawyers and other professionals are aware of the 2018 South Dakota v. Wayfair decision that gave rise to this concept and many refer to this as Wayfair laws.

Once nexus is established, your business is required to register with the state to collect and remit sales and use tax. Your business, however, might have established nexus many years ago, failed to remit collected taxes or have other reasons to clean up prior sales tax mistakes. In this case, you may wish to file a Sales Tax Voluntary Disclosure Agreement to properly report taxable income.

If you aren’t sure how to do this, don’t worry. Sales Tax Helper assists business owners of all kinds with a variety of legal matters pertaining to sales tax. We can help you prepare and submit a Voluntary Disclosure Agreement to ensure your company complies with state laws governing sales and use tax, which can help you avoid fees and even criminal charges for failing to report taxable income.

If you’re ready to get started, contact Sales Tax Helper for assistance with your Voluntary Disclosure Agreement.

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How Sales Tax Helper Can Assist You

Sales Tax Helper can assist business owners by helping them establish Voluntary Disclosure Agreements, filing accurate sales tax registrations and returns, or applying for tax amnesty in states where they had nexus.

Signing a Voluntary Disclosure Agreement

Should you opt for a Voluntary Disclosure Agreement, we can help you work with states to pay back previous sales tax obligations. Due to a limited lookback period (about 3-4 years), you may only be liable for a few years of sales back tax. You might find this highly beneficial if you’ve had a nexus in a state for many years.

A Voluntary Disclosure Agreement also waives penalties that states could otherwise levy against your company for failing to collect and remit sales tax. Again, this can benefit your company a great deal if it has operated with a nexus in a state for many years.

Upon completion of the Voluntary Disclosure Agreement Process, we can help your company ensure compliance with each state’s sales tax laws going forward.

An Alternative: Backdating Your Registration

An alternative option to signing a Voluntary Disclosure Agreement is backdating your registration with a given state. This essentially means you’re registering for a sales tax permit at the time your company reached nexus.

Although backdating registration can be a cheaper alternative and be up to three times quicker, it doesn’t protect a company from penalties as a Voluntary Disclosure Agreement can. In other words, your company could be on the hook for its back sales taxes and any penalties the state assesses against it.

Before proceeding with this option, our team at Sales Tax Helper can guide you. We can help you understand your situation better and the options that might work best for you.

Tax Amnesty May Be Available

Some states offer tax amnesty programs to unregistered taxpayers. These limited programs allow such taxpayers to voluntarily register without incurring penalties for failing to collect and remit previously due sales taxes.

This alternative isn’t as inclusive as a Voluntary Disclosure Agreement, so your business could become liable for back taxes other than sales and use taxes. Also, tax amnesty programs can compel companies to waive possible claims for tax refunds or their right to protest an audit assessment.

Considering a Voluntary Disclosure Agreement? Contact Sales Tax Helper Today!

If you’re exploring a Voluntary Disclosure Agreement and aren’t sure which level of support is right for your business, Sales Tax Helper LLC is here to guide you. Our team can help you understand your options, explain the process, and recommend the best solution to meet your specific needs.

Whether you’re looking for tools to manage the process yourself, expert advice for specific steps, or full-service support to handle everything on your behalf, we’ve got you covered.

Take control of your sales tax challenges today. Create a free account to get started.

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