In order to properly understand the significance of the VDA tax facts that are listed below, it may be useful to define what VDA tax is. In short, VDA tax refers to overdue tax which is paid by both individuals and businesses through a negotiated agreement known as a voluntary disclosure agreement.
Invaluable facts on VDA tax:
You can’t use it to pay for taxes that are over 4 years overdue:
The ideal candidates to use a VDA are individuals or businesses that have discovered that they have taxes owing from the past 1-4 years. As they can negotiate the factors of their agreement and can ask a state to waive any late penalties if they are willing and able to pay all outstanding sales taxes plus interest in a lump sum. However, if your business can’t afford to pay all of its taxes at once, you can negotiate other highly favorable terms. The key to having your agreement approved is to make it clear that you’re not trying to hide anything or dodge taxes and that you simply want to clear up any mistakes that you have made when it comes to your tax obligations.
You can choose to remain anonymous:
Whether you’re a business owner or an individual, you can choose to keep your identity hidden for personal reasons, by going to a tax specialist to handle your VDA negotiation process for you. Perhaps a larger number of businesses would be open to the idea of paying their overdue taxes if they were assured that their identity could be kept under wraps.
It’s not the only way to avoid paying late penalties:
While it’s one of the safest methods of avoiding being charged with late penalties, even if your business accounts are audited and it’s found that you have tax owing, you’ll only be made to pay late penalties if it’s certain that you purposely tried to skirt your sales taxes. For example, if you’ve been audited in the past and were found to have owed tax, if you are audited a second time and have failed to pay your taxes, you’re far more likely to get into deep water. Then if it’s your first time. So if your business has been caught with outstanding taxes in the past, it’s definitely worth opting for a VDA to sort out your current tax issue, in order to prove to the state that you’re trying to comply with their tax regulations.
In most circumstances the selected auditor will only check your taxes for the past 4 years:
You may be interested in learning that in most circumstances your auditor will only check out documents surrounding your taxes for the past 1-4 years. If they have found no reason for further concern, it’s highly unlikely that they’ll dig through older tax documents and financial documents.
So if you are looking for a safe, easy way to pay taxes that you forgot to pay that will decrease your chances of getting into legal trouble or incurring fines, look into filing for a VDA.