Voluntary Disclosure
In short
A program that converts an unlimited exposure into a bounded one. It is available only until the Department makes contact, and applications can be anonymous.
In full
The Voluntary Disclosure Agreement program allows a person or business to come forward and address past unmet tax obligations in exchange for stated benefits. Transaction privilege and use tax is eligible.
What it gives is a limited look-back period. The standard is four years from the date the application is submitted, with deviations considered case by case. Penalties are abated once all tax and interest have been paid timely, and the agreement includes a waiver of the Department's ability to audit periods before the look-back period.
That waiver is the substance of the program for anyone who has not filed. A period for which no transaction privilege tax return was filed has no limitation period at all under A.R.S. § 42-1104(B)(1)(b) and never acquires one. For a taxpayer who did file, four years is the ordinary statutory period and the program changes little.
What it costs is interest and finality. Standard interest applies, and the agreement is final — there are no protest rights. Participation is limited to one time per tax type, and no refund may be requested once the case is closed.
Eligibility is the part with a deadline that gives no warning. A person may apply only if the Department has not already made contact regarding an audit, a non-filer notice or an enforcement investigation. Correspondence or notices already received must be disclosed on the application, and prior contact is cause to determine an applicant ineligible. Prior collection activity for any tax type must be satisfied in full before applying.
Applications may be made anonymously.
For transaction privilege tax, the application is accompanied by a TPT Schedule in spreadsheet form, which serves as a substitute for filing returns for each period. It sets out taxable periods, tax jurisdictions, business classification codes, gross receipts, deduction amounts, deduction codes, collected tax amounts and net taxable figures. Two fifteen-day clocks then run: one to provide a license number or application and a Form 285 where applicable, and one to sign the agreement and pay in full.
A taxpayer with undisclosed liabilities in several states may instead apply through the Multistate Tax Commission.
ADOR Voluntary Disclosure and Compliance Program; ADOR Disclosure and Compliance Programs; A.R.S. § 42-1104(B)(1)(b)