In April, the North Carolina Department of Revenue (DOR) released a communication discussing their Voluntary Disclosure Program. The NC DOR would like taxpayers to take advantage of the program, especially during this slow economy.
Details and Benefits
Now, the Voluntary Disclosure Program allows taxpayers who have never filed returns or registered for state taxes, such as sales and withholding, and who have not been contacted by the North Carolina Department of Revenue about their taxes, to file and pay those taxes without the usual civil penalties and other consequences.
While certain penalties may apply to Voluntary Disclosure participants, the penalties are much less severe than for oversights uncovered during audits or other examinations.
As stated in NC DOR's communication, to qualify for Voluntary Disclosure, a taxpayer must meet all of the following conditions:
1. Not have been contacted by the Department of Revenue about any state tax for which voluntary disclosure is requested
2. Does not owe any state taxes
3. Is not being audited for any state taxes
4. Was never previously registered for the tax schedule being disclosed
5. Has never filed a return with the department for the tax schedule being disclosed
6. Must pay the tax due plus accrued interest; the department will calculate the interest due and notify the taxpayer upon request
7. Must make records available to the Department of Revenue for audit to verify the amount of the tax liability and the accuracy of the representations
8. Must comply with all tax laws for all state tax schedules after the disclosure
As stated in the NC DOR communication, initial requests to participate in the Voluntary Disclosure Program are anonymous; often taxpayers make such requests through tax preparers, accountants or attorneys.
Also, Voluntary Disclosure is available for individual taxpayers as well as businesses. The benefits include the waiver of civil penalties and an agreement not to pursue criminal charges by the department. Taxpayers can save hundreds or potentially thousands of dollars in penalties by coming forward. In addition, taxpayers who qualify for Voluntary Disclosure must pay any taxes due for the past four delinquent years.
Click on the following link to directly access the NC DOR Communication:
http://www.dornc.com/aboutus/education/voluntary_disclosure.html
Voluntary Disclosure Programs in General
Generally, as discussed in earlier posts, "nexus" or having a taxable presence in a state creates filing obligations that are often overlooked. Hence, your business may have tax obligations in NC or other states and not know it. Voluntary Disclosure Programs are good "tools" to allow your business to get in compliance at reduced costs.
If you are not familiar with Voluntary Disclosure Programs, most, if not all states, have similar types of programs. Therefore, if you are considering taking advantage of North Carolina's program or another state's program, please contact me at leveragesalt@earthlink.net to discuss.
