What is VDA???

A Voluntary Disclosure Agreement (VDA) is a formal program that allows business to proactively come forward to a state to report and pay previously uncollected or unremitted sales tax, before the state discovers the liability through an audit, or other means. In exchange, the state typically offers significant benefits.

Why Businesses Need a VDA

Unknowingly created nexus in a state could be either a physical presence, remote employees, or an economic nexus.

  • Never registered in a state despite having a tax obligation.
  • Collected tax but failed to remit it to the state.
  • Acquired a business with historical tax exposure.

Some penalties include penalties waiver or reduced penalties, reduced interest in some cases.

States have different lookback periods.

VDAs are most effective before a state makes the contact first. Once a business receives an audit notice, the VDA window typically closes immediately for that state.