What is VDA? In business, the acronym VDA refers to a voluntary disclosure agreement. To discover whether your business should consider negotiating a VDA or not simply continue reading to discover everything you need to know about voluntary disclosure agreements and how they can potentially help your business. Especially if you want to decrease the lay payments which your business will pay on backdated taxes.
What is VDA? A guide to VDAs:
It’s an option in order to self-report taxes which your business hasn’t paid:
The number one reason why many businesses choose to use voluntary disclosure agreements is in order to avoid being penalized during tax audits. As if businesses choose to forgo backdating any taxes which they have not paid and this fact is discovered through a tax audit, they will be severely penalized. So if you know that there are taxes that your business hasn’t disclosed in the past few years, it’s well worth considering choosing to use a VDA in order to self-report your backdated taxes. In order to decrease the amount of tax which your business will end up paying.
You can use a VDA in order to prove that your business is tax compliant:
Another benefit of using a VDA to self declare your business’ backdated taxes, is that you’ll be able to provide evidence that your business is tax compliant and is not trying to hide any unpaid taxes. While the state that your business is currently registered in may still choose to complete an independent audit on your business’ taxes, if the auditor doesn’t find any evidence of misrepresentation or false facts, the auditor will not audit your taxes beyond the lookback period.
You’ll get to take advantage of a penalty abatement:
A third bonus of choosing to use a voluntary disclosure agreement in order to decrease the amount of tax and penalties which your business will end up paying in the near future is that your business may be eligible for a valuable penalty abatement. What is a penalty abatement? Simply put, a penalty abatement is the removal of penalty fees that are given to businesses that fail to pay their taxes on time. So if you want to be able to increase your chances of being granted lucrative penalty abatements, which will decrease your business’s costs, it’s well worth seriously considering undertaking a voluntary disclosure agreement. Do however keep in mind that depending on the state in which your business operates in your business may qualify for late penalty abatements, without having to go through a voluntary disclosure agreement.
Your next step:
If you’re unsure of whether your business is likely to be approved to undertake a voluntary disclosure agreement, it’s a great idea to take your next move and to reach out to a qualified tax expert to see whether your business would benefit from undertaking a voluntary disclosure agreement. In order to avoid having backdated taxes found in an independent tax audit and to increase your chances of being granted penalty abatements. That will decrease your business’ operating costs.