If your business operates in Texas and has not been collecting sales tax, or you have been underreporting sales tax, you might want to consider the Texas Sales Tax Voluntary Disclosure Agreement (VDA) program. This program provides a way for businesses to come forward and disclose their past sales tax liabilities in exchange for penalty and interest relief.
What is the Texas Sales Tax Voluntary Disclosure Agreement?
The Texas Sales Tax VDA program is a voluntary program available to businesses that have not been collecting sales tax on their taxable sales or have been underreporting their sales tax liability. The program allows businesses to come forward and disclose their uncollected or underreported sales tax liability to the state of Texas. In exchange, the state will waive penalties and reduce the interest charged on the unpaid tax liabilities.
Why should businesses consider the Texas Sales Tax Voluntary Disclosure Agreement?
Businesses that have not been collecting sales tax on their taxable sales or have been underreporting their sales tax liability may be subject to significant penalties and interest charges. By participating in the Texas Sales Tax VDA program, a business can avoid those penalties and reduce the interest charged on the unpaid tax liabilities.
Additionally, if the business is discovered by the state and is audited, the penalties and interest charges could be much higher than what a business would pay through the VDA program. By participating in the VDA program, businesses can avoid those higher penalties and interest charges.
Who is eligible for the Texas Sales Tax Voluntary Disclosure Agreement?
The Texas Sales Tax VDA program is available to businesses that have not been collecting sales tax on their taxable sales or have been underreporting their sales tax liability. To be eligible for the program, the business must not be under audit or have received a notice from the state regarding the non-payment or underreporting of sales tax.
How does the Texas Sales Tax Voluntary Disclosure Agreement work?
To participate in the Texas Sales Tax VDA program, a business must complete an application and provide certain information to the state, including:
– The taxpayer`s name and address
– A description of the taxpayer`s business
– The estimated amount of uncollected or underreported sales tax liability
– The period of time the liability covers
– Any other relevant information requested by the state
Once the application is submitted, the state will review the information and notify the business if they qualify for the program. If the business is accepted into the program, they will be required to pay the disclosed tax liability within a specified time frame, usually 60 days. The state will waive penalties and reduce the interest charged on the unpaid tax liabilities.
Conclusion
If your business has not been collecting sales tax or has been underreporting its sales tax liability, the Texas Sales Tax Voluntary Disclosure Agreement program may be a good option to consider. By participating in the program, businesses can avoid significant penalties and reduce the interest charged on the unpaid tax liabilities. To determine if your business is eligible for the program, contact a tax professional or the Texas Comptroller`s office.