Mtc Voluntary Disclosure Agreement

MTC Voluntary Disclosure Agreement: What You Need to Know

The Multistate Tax Commission (MTC) Voluntary Disclosure Agreement (VDA) is a program designed to help businesses comply with state tax laws and potentially reduce penalties and interest. The program is available to businesses that have not previously registered or filed tax returns in a state.

Here`s what you need to know about the MTC VDA:

What is the MTC VDA?

The MTC VDA is a voluntary program that allows businesses to come forward and disclose prior tax liabilities and register for future compliance. The program is designed to help businesses avoid penalties and interest that may have otherwise been assessed for non-compliance.

What are the benefits of the MTC VDA?

Participating in the MTC VDA can offer several benefits to businesses. These benefits include:

– Limited look-back period: The MTC VDA provides a limited look-back period for businesses, typically three to four years, depending on the state. This means that businesses will not be responsible for paying any back taxes that were due prior to the look-back period.

– Penalty and interest relief: Participating in the MTC VDA can often reduce or eliminate any penalties or interest that may have been assessed by the state for non-compliance.

– Reduced audit exposure: By voluntarily disclosing prior tax liabilities and registering for future compliance, businesses can reduce their exposure to future audits and potential penalties.

How does the MTC VDA work?

Here`s how the MTC VDA process typically works:

1. Submission of the VDA: Businesses interested in participating in the MTC VDA must submit a formal request to the state. The request must include a full disclosure of any prior tax liabilities, along with a plan for future compliance.

2. Review by the state: The state will review the VDA request and may request additional information or clarification.

3. Acceptance or rejection of the VDA: Once the state has reviewed the request, it will either accept or reject the VDA. If the VDA is accepted, the state will provide the business with a formal agreement outlining the terms and conditions of the VDA.

4. Compliance with the VDA: Once the VDA is in effect, the business must comply with all terms and conditions of the agreement, including timely filing of tax returns and payment of all taxes due.


If you`re a business that has not previously registered or filed tax returns in a state, the MTC VDA program may be a good option for you to consider. Participating in the program can help you comply with state tax laws, reduce penalties and interest, and potentially avoid future audits. Be sure to consult with a qualified tax professional to determine if the MTC VDA is right for your business.