Alabama Department of Revenue Christy Vandevender Tax Policy & Research Division.

Alabama Department of Revenue

Christy Vandevender Tax Policy & Research

Division

Agenda Voluntary Disclosure State of Alabama Voluntary

Disclosure Program Multistate Tax Commission Multistate Tax Commission

Voluntary Disclosure Program Overview Q&A

Voluntary Disclosure

What is Voluntary Disclosure?

Taxpayer voluntarily reveals itself for unpaid tax liabilities.

A delinquent taxpayer discloses information not previously reported to a tax agency, and by doing so voluntarily, avoids penalties or prosecution normally associated with prior non-disclosure.

Alabama Voluntary Disclosure Program

AL Voluntary Disclosure Program

The Department of Revenue has provided a voluntary disclosure program to encourage businesses that are not in compliance with the Alabama tax laws to come forward voluntarily to register and bring their tax accounts into compliance.

This program is administered by the Tax Policy and Research Division of the Department.

The voluntary disclosure program is offered as a service to the taxpayer.

AL Voluntary Disclosure Program

The taxpayer can come forward anonymously and disclose their name upon signing the agreement.

The Department will in no way seek to identify those taxpayers who wish to remain anonymous.

To remain anonymous when making initial contact, the taxpayer may engage representation from a tax preparer, accountant or attorney.

AL Voluntary Disclosure Program

In order to be considered for the voluntary disclosure program, the applicant must not have been “contacted” by the Department or an agent of the Department, such as the Multistate Tax Commission, nor filed a tax return for seven years prior to the initial written request for voluntary disclosure.

AL Voluntary Disclosure Program

Contact includes, but is not limited to: Receipt of a nexus questionnaire A delinquent or billing notice A telephone call An audit or notice of audit Payment of tax, including payment of

estimated tax Registration for tax Registration with the Secretary of State

AL Voluntary Disclosure Program

Contact includes, but is not limited to: Filing of a return, including a request

for extension of time to file Response to an application for a

Certificate of Good Standing or Certificate of Compliance, by the taxpayer, or on behalf of the taxpayer

The Department considers contact and the filing of returns on a tax-by-tax basis.

AL Voluntary Disclosure Program

Taxes eligible for Voluntary Disclosure include: Corporate income taxes

Business privilege taxes

Withholding taxes

Sales and Use taxes

AL Voluntary Disclosure Program

The Department does not enter into agreements for individual income tax liabilities, unless the taxpayer is a nonresident shareholder and the S-corporation will file composite returns on their behalf.

The Department of Revenue will not enter into Voluntary Disclosure Agreements with entities organized under Alabama law who wish to come forward for Business Privilege tax.

AL Voluntary Disclosure Program

In general, this program is not open to taxpayers who have at sometime filed returns and/or qualified to do business and have fallen behind in their filing responsibilities.

Zero returns will not be accepted through the Voluntary Disclosure Program.

AL Voluntary Disclosure Program

If a taxpayer is considering, or in the process of, entering Alabama’s Voluntary Disclosure Program, they should make sure not to initiate any kind of contact or filing, e.g. registering with the Secretary of State or filing an extension, until the request for Voluntary Disclosure has been received by the Department.

AL Voluntary Disclosure Program

The Voluntary Disclosure Program has a mandatory three-year look-back period.

The three-year look-back period is calculated by determining the last three tax years (or 36 months) which are past due at the time of initial application for Voluntary Disclosure.

AL Voluntary Disclosure Program

If the taxpayer has collected Sales, Use, or Withholding tax without remitting them, the look-back period will be extended to include all periods in which Sales and Use and/or Withholding tax was collected.

AL Voluntary Disclosure Program Responsibility of the

Taxpayer Enter into a binding agreement

with the Department for at least a three-year look-back period.

File all returns, with required supporting documentation, for the period(s) specifically outlined in the agreement within 90 days of the effective date of the agreement.

Remit all tax and interest due as agreed upon.

AL Voluntary Disclosure Program

The following actions will make the Voluntary Disclosure Agreement null and void:

Misrepresentation of any facts set forth in the initial letter of contact.

Failure by the taxpayer to comply with the terms of the agreement.

AL Voluntary Disclosure Program

Taxpayer Benefits of Voluntary Disclosure: Limited look-back period. Spreadsheets are allowed, in lieu of

returns, for withholding taxes; and sales and use taxes.

The Department agrees to waive late file and late payment penalties and the taxpayer will be billed directly for interest.

One central point of contact for all taxes being disclosed.

No cost to taxpayer for participation in program.

AL Voluntary Disclosure Program

Department Benefits of Voluntary Disclosure:

Taxpayer compliance resulting in increased revenues.

No resources used locating taxpayer, proving a filing obligation exist, and auditing of taxpayer; resulting in cost savings to the State.

One central point of contact for all taxes being disclosed.

Multistate Tax Commission

Multistate Tax Commission

The Multistate Tax Commission is an intergovernmental state tax agency working on behalf of states and taxpayers to administer, equitably and efficiently, tax laws that apply to multistate and multinational enterprises. 

The commission was created in 1967.

Multistate Tax Commission

The Commission has been a voice for preserving the authority of states to determine their own tax policy within the limits of the U.S. Constitution.

The Multistate Tax Commission is funded by its member states.

Multistate Tax Commission

The Commission is charged with: Facilitating the proper determination of

State and local tax liability of multistate taxpayers, including the equitable apportionment of tax bases and settlement of apportionment disputes.

Promoting uniformity or compatibility in significant components of tax systems.

Facilitating taxpayer convenience and compliance in the filing of tax returns and in other phases of tax administration.

Avoiding duplicative taxation.

Multistate Tax Commission

Voluntary Disclosure Program

Multistate Tax Commission Voluntary

Disclosure Program Multi-state Voluntary Disclosure

allows a non-filer with potential liability in multiple U.S. states (including the District of Columbia) to negotiate a settlement agreement regarding back liability on favorable terms through a single point of contact and a single, uniform procedure.

Multistate Tax Commission Voluntary

Disclosure Program The Multi-state Voluntary Disclosure

Program is administered by the National Nexus Program, a division of the Multistate Tax Commission.

The Multi-state Voluntary Disclosure Program is offered as a service to the taxpayer.

Multistate Tax Commission Voluntary

Disclosure Program Taxes eligible for the Multi-state

Voluntary Disclosure Program include: Corporate income taxes

Business privilege taxes

Withholding taxes

Sales and Use taxes

Multistate Tax Commission Voluntary

Disclosure Program Limited lookback period would be

consistent with AL Voluntary Disclosure Program. Mandatory 3 years or 36 months

If the taxpayer has collected Sales, Use, or Withholding tax without remitting them, the look-back period will be extended to include all periods in which Sales and Use and/or Withholding tax was collected.

Multistate Tax Commission Voluntary

Disclosure Program A non-filer may apply directly to

states for voluntary disclosure.  However, when more than one state is involved, the non-filer will find multi-state voluntary disclosure to be faster and more efficient, and therefore less costly.

There is no charge to a taxpayer or its representative for participation.

Multistate Tax Commission Voluntary

Disclosure Program In order to be eligible for the Multi-

state Tax Commission Voluntary Disclosure Program, the taxpayer must not have been contacted by the state or the commission.

Contact for the Multi-state Voluntary Disclosure program has the same meaning as described for the AL Voluntary Disclosure Program.

Multistate Tax Commission Voluntary

Disclosure Program The Commission does not process

disclosures when the good-faith estimate of tax due is less than $500.

Taxpayers with minimal back liability may wish to contact the state directly for a voluntary disclosure agreement. 

Overview

Alabama Voluntary Disclosure Program Best choice if taxpayer is remitting

taxes to AL only. If tax liability is <$500 but >$0,

taxpayer would be eligible for state program.

Multistate Tax Commission Voluntary Disclosure Program Best choice if taxpayer is remitting

taxes to multiple states.

Overview

AL Voluntary Disclosure Program:http://revenue.alabama.gov/analysis/voluntary-disclosure.cfm

Multistate Tax Commission Voluntary Disclosure Program:

http://www.mtc.gov/Nexus-Program/Multistate-Voluntary-Disclosure-Program

Questions?Christy Vandevender

[email protected]