State & Local Tax Blog

Washington Extends Voluntary Disclosure Program

The state of Washington has extended its temporary expanded voluntary sales tax disclosure agreement criteria through Nov. 30, 2020.

The program “encourages unregistered businesses” with “substantial nexus” “to comply with Washington tax laws and to voluntarily register and pay prior tax obligations” in exchange for several benefits.

The extension, made effective July 15, 2020, increases VDA eligibility.

  • Under the traditional VDA, businesses need to have “never registered with or reported taxes” to the Washington Department of Revenue. The temporary extended VDA criteria extends this to businesses that closed their tax registration prior to Jan. 1, 2020 (including those that previously filed tax returns), and businesses that were placed on active non-reporting status prior to Jan. 1, 2020.
  • Under the traditional VDA, businesses need to have been “never contacted by the department for enforcement purposes.” The temporary extended VDA criteria extends this to businesses that had their most recent enforcement contact made prior to July 1, 2019, and that have not been named as an affiliate of another business through an enforcement contact.

Disclosing under the VDA shortens the “look back” period for tax liability from seven to four years, and potentially waives the Department’s 39% penalty for noncompliance.

Note that the VDA does not cover businesses that collected but never remitted sales tax.

You can learn more about expanded eligibility criteria on the Washington Department of Revenue site.

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