Navigating State Voluntary Disclosure Programs: Multistate and Single State Programs to Resolve Unseen Liabilities

Most states have VDPs that allow taxpayers to resolve tax bills accrued during a defined look-back period. In addition, almost three-quarters of U.S. states, plus the District of Columbia, participate in a multistate VDP to assist taxpayers by providing an integrated, uniform procedure for settling unpaid back taxes. Utilizing VDPs can be a key strategy in resolving tax liabilities in a way that avoids penalties and interest on unpaid taxes, while quantifying unreported tax liabilities.

A significant advantage to VDPs is the opportunity most programs present for companies to address issues of expanded nexus. As states continue to look for mechanisms to tax economic activity that does not include physical presence within their jurisdictions, nexus expansion takes on a larger role in states’ taxing regimes. Taxpayers often find themselves with unanticipated tax liabilities, and VDPs can serve as a way to identify these liabilities while protecting the taxpayer from open disclosure.

Detailed and complex rules govern participation in VDPs, and tax advisers must be aware of their role and duties in utilizing a VDP.

Listen as our experienced panel provides a comprehensive guide to the benefits, risks and processes of VDPs, both at the multistate and individual state level.

1. “Creeping nexus” and reserves for uncertain tax positions as triggers
2. What is the voluntary disclosure program
3. Taxpayer goals and strategies in VDPs
4. Mechanics of multistate VDPs
5. Mechanics of individual state VDPs
6. Voluntary disclosure agreements

The panel will review these and other important issues:

• When should a taxpayer elect to apply for VDP participation
• Nexus issues that can arise from a VDP participation, and how can taxpayers avoid risk of additional tax from expanded nexus
• Means to achieve penalty abatement both inside and outside of VDP
• How multistate VDPs work in comparison, and conjunction, with individual states’ VDPs?
• Illustration using Massachusetts and surrounding states’ VDPs

Learning Objectives

After completing this course, you will know how VDPs work, both at the multistate and individual state level. You will know how to determine whether a VDP is the best strategy for a taxpayer to resolve potential but unrecognized tax liabilities, and what goals a taxpayer should pursue in participating in a VDP.

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Basic knowledge of taxation.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.