The Voluntary Disclosure Program (VDP) provides an opportunity for businesses and individuals who have recently become aware of their Pennsylvania tax obligations to voluntarily come forward. In return for coming forward voluntarily, filing their tax returns, and clearing their tax debts, taxpayers are only responsible for the payment of tax and interest. Penalties for most taxes administered by the Department of Revenue will be waived when the requirements of the Voluntary Disclosure Agreement have been completed.
Who is eligible:
Qualifying taxpayers who recently became aware of outstanding tax liabilities (sales and use tax, corporate net income tax, corporate specialty tax, employer withholding tax, personal income tax, etc.) will only be responsible for satisfying tax liabilities for up to three years plus the current year. Penalties for those years will be waived and prior years’ liabilities will be forgiven when the taxpayer files the appropriate returns and remits payment for all taxes and interest due.
Unregistered taxpayers with the Department of Revenue who have collected business trust fund taxes (sales and use tax, employer withholding tax, etc.) but failed to remit those taxes may be eligible for the Voluntary Disclosure Program. However, such taxpayers must remit taxes for all years collected; they will not receive a limited lookback. Penalties will be waived for all years.
Ineligible Taxpayers
If a taxpayer is currently registered or was previously registered with the Department of Revenue, they are not eligible for the Voluntary Disclosure Program. Taxpayers whom the department has contacted and pursued collection actions against or investigated are also not eligible to participate in the program.
The department considers contact and registration on a tax-by-tax basis. For example, if a taxpayer has been contacted, paid, or filed a return for one type of tax, it does not preclude the taxpayer from entering the program for other tax types.
Corporation tax liabilities of foreign and domestic corporations registered with the Departments of State and Revenue will not be considered for the Voluntary Disclosure Program.
How to Participate:
Taxpayers interested in participating in the program should send an email to ra-voluntarydisclosure@pa.gov to request a case number. The email should include the contact information (mailing address, phone number, etc.) for the person requesting the case.
Once assigned, the taxpayer will be provided with their case number, application instructions, and a Business Activities Questionnaire (DEO-50).
Along with the completed Business Activities Questionnaire, the taxpayer must provide the following information to the department so it may determine the taxpayer’s eligibility for the Voluntary Disclosure Program:
Taxpayers may remain anonymous when submitting the Business Activities Questionnaire and the requested information above. They must disclose their identity only when an agreement is drafted.
To qualify for the Voluntary Disclosure Program, the taxpayer must agree not to petition any reported liabilities. Additionally, the Department reserves the right to audit the taxpayer.
Taxpayers determined by a Voluntary Disclosure Committee to be eligible for the program will receive a proposed Voluntary Disclosure Agreement for signature. The agreement must be signed by the taxpayer or an authorized representative and returned to the Department within 45 days, along with a completed Power of Attorney. Modifications to the agreement render it void. Once the agreement has been approved and signed by the Department of Revenue and, if required, the Auditor General, a copy of the agreement will be returned to the taxpayer along with instructions for filing returns and remitting payment.
Once a taxpayer is enrolled in the Voluntary Disclosure Program, the Voluntary Disclosure Office will take responsibility for all account processing, including assigning of account numbers and processing of returns and payments. Taxpayers pursuing a VDA should not register on their own for the taxes for which they are coming forward. The Voluntary Disclosure Office will register the taxpayer at the appropriate time.
Failure to comply with the agreement’s terms or other requirements of the Voluntary Disclosure Program in a timely and accurate manner will render the agreement void, and the taxpayer will become subject to assessment and penalties.
If you would like to discuss your business or personal tax planning, tax preparation, and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton, PA office to discuss your situation. You can also schedule a consultation at Click Here.
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About Bryan Haarlander, EA, CTRS:
Bryan Haarlander is an IRS-licensed Enrolled Agent and a Certified Tax Resolution Specialist who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA. This includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, and West Chester. We also serve clients in Delaware, New Jersey, New York, and the United States.
Bryan is well-known for his IRS tax resolution expertise and his book How to Resolve Your IRS Tax Debt Problems.