Voluntary disclosure agreement
In the United States, a Voluntary Disclosure Agreement (VDA),is a program whereby taxpayers can receive certain benefits from proactively disclosing prior period tax liabilities in accordance with a binding agreement. Most states offer Voluntary Disclosure Agreements to encourage companies to comply with a states tax laws and in turn generate revenue for the state that it may not have had if the company did not come forward and disclose its liabilities. Additionally, the state can generate future revenue by having a company register in their state to collect and remit certain taxes. [http://oatax.com/ar3112006.htm]
The primary benefits of a Voluntary Disclosure typically include:
*Limitations Of The Prior Look-Back Period - Usually the look-back period is limited to between 3 and 5 years as opposed to having no statute of limitations if no return has ever been filed. In some cases prospective agreements can be reached in which the taxpayer is forgiven of all past liabilities, but agrees to future compliance.
*Abatement Of Penalties - Most states will waive penalties on any prior period taxes that are remitted in connection with a Voluntary Disclosure Agreement.
*Full Or Partial Interest Abatement - A limited number of states will abate interest in full. Many states apply a reduced interest rate to prior period taxes remitted in connection with a Voluntary Disclosure Agreement.
*Friendlier Sales And Use Tax Audit - While state taxing authorities typically reserve the right to audit taxpayers who come forward pursuant to a Voluntary Disclosure Agreement, the audit will typically be limited to the reduced look-back period, and it would generally focus more on understanding and confirming the reasonableness of the taxpayer's liability quantification approach, rather than on uncovering additional liabilities.
*Brings Closure To Prior Periods - The taxpayer will be comfortable knowing that prior period liabilities are closed and will be able to concentrate its compliance efforts on current and future periods.
*Protects Potential Buyers From Prior Ownership's Liabilities. [http://oatax.com/ar3112006.htm]
*Cost - The main disadvantage of this alternative is the cost. This alternative usually requires the assistance of a third party service provider who will require a fee for their services and the compliance cost might outweigh the benefits (i.e. if the potential exposure is not material).
*Compliance Burden - The taxpayer will have an increased compliance burden immediately and going forward, as they will now be required to remit and report taxes. [http://oatax.com/ar3112006.htm]
Wikimedia Foundation. 2010.
Look at other dictionaries:
agreement — a‧gree‧ment [əˈgriːmənt] noun [countable] 1. an arrangement or promise to do something, made by two or more people or organizations: • Under the agreement, the company will distribute our products in North America. • What happens if the warring… … Financial and business terms
disclosure — dis·clo·sure /dis klō zhər/ n: an act or instance of disclosing: as a: a lender s revelation of information to a consumer under the Truth in Lending Act that enables the consumer to make an intelligent decision about the loan b: the revelation to … Law dictionary
Offset agreement — Defense offset agreements are legal trade practices in the aerospace and military industries. These commercial practices do not need state regulations but, since the purchasers are mostly military departments of sovereign nations comparable to… … Wikipedia
ACEA agreement — The ACEA agreement refers to a voluntary agreement between the European Automobile Manufacturers Association (ACEA) and the European Commission to limit the amount of carbon dioxide (CO2) emitted by passenger cars sold in Europe. With 18 million… … Wikipedia
Warwick Agreement — The Warwick Agreement is the name of a document agreed in July 2004 to the 2005 General Election between many of Britain s main trade unions and the Labour Party, which helped form Labour s 2005 election manifesto.The trade unions are organised… … Wikipedia
Verband der Automobilindustrie — The Verband der Automobilindustrie e. V., short VDA, is a German interest group of the German automobile industry, both automobile manufactures and automobile component suppliers. The group is located in Frankfurt, Germany. Current president… … Wikipedia
Patient safety — is a new healthcare discipline that emphasizes the reporting, analysis, and prevention of medical error that often lead to adverse healthcare events. The frequency and magnitude of avoidable adverse patient events was not well known until the… … Wikipedia
Joint defense privilege — The joint defense privilege, or common interest rule, is an extension of the attorney client privilege. Under “common interest” or “joint defense” doctrine, parties with shared interest in actual or potential litigation against common… … Wikipedia
P. Chidambaram — In this Indian name, the name Palaniappan is a patronymic, not a family name, and the person should be referred to by the given name, Chidambaram. Palaniappan Chidambaram பழனியப்பன் சிதம்பரம் Minister of Home Affairs … Wikipedia
Companies Act 2006 — The Companies Act 2006 Parliament of the United Kingdom Long title An Act to reform company law and restate the greater part of the enactments relatin … Wikipedia