Alabama Voluntary Disclosure Agreement: What You Need to Know

If you own a business in Alabama or are considering expanding your business into the state, it`s important to be aware of the Alabama Voluntary Disclosure Agreement (VDA). This agreement is designed to encourage companies to come forward and voluntarily report any past due taxes and bring their accounts into compliance.

What is the Alabama Voluntary Disclosure Program?

The Alabama Department of Revenue (ADOR) established the Voluntary Disclosure Program to allow businesses to come forward and disclose any underreported or unreported taxes without facing penalties or interest. The program applies to most Alabama taxes, such as sales tax, use tax, and income tax.

What are the Benefits of the Voluntary Disclosure Agreement?

The main benefit of the VDA is that it allows businesses to avoid penalties and interest that would normally be assessed for unpaid taxes. Additionally, by coming forward voluntarily, businesses can avoid the possibility of being audited and facing more severe penalties.

Qualifications for the Alabama VDA

To qualify for the Alabama VDA, businesses must meet certain criteria. First, they must not currently be under audit or investigation by the ADOR. Second, they must not have registered for a tax account with the ADOR previously. Finally, they must not have had any prior contact with the ADOR regarding their tax liability.

How to Participate in the Alabama VDA Program

To participate in the Alabama VDA program, businesses must submit an application to the Alabama Department of Revenue. The application must include a detailed description of the business and its operations, as well as any relevant tax information. The ADOR will review the application and issue a determination letter outlining the terms of the agreement.

Once the VDA is approved, the business must comply with the terms of the agreement, which typically include paying all past due taxes, filing all required tax returns, and agreeing to stay current on all future taxes.

Conclusion

The Alabama Voluntary Disclosure Agreement is designed to help businesses come forward and disclose any underreported or unreported taxes without facing penalties or interest. By participating in the program, businesses can avoid the possibility of being audited and facing more severe penalties. If you own a business in Alabama or are considering expanding your business into the state, it`s important to be aware of the VDA and the potential benefits it can provide.