The Voluntary Disclosure Program serves taxpayers who wish to voluntarily report previously undisclosed liabilities for any tax administered by the department. Taxpayers may work directly with department auditors, or indirectly by way of a duly appointed representative. The program auditors facilitate the licensing, registration, payment process and provide education to ensure ongoing compliance with state and municipal tax laws.
Benefits of the Voluntary Disclosure Program
Benefits of the Voluntary Disclosure Program include the following:
- Reduced filing periods or “look-back period” (The standard look-back period is four years; however, this is determined on a case-by-case basis).
- Abatement of late filing and late payment penalties for the established look-back period.
- Use of a TPT Schedule in lieu of filing returns for TPT filers.
- Compliance with state and municipal transaction privilege tax laws within 90 days or less.
- Assistance from the Arizona Department of Revenue (ADOR) auditors as liaisons.
Conditions and limitations of the Voluntary Disclosure Program include the following:
- Taxpayers must provide all requested information within 30 days of acceptance into the program. To avoid unnecessary delays, it is advisable to apply only after the required forms and information have been prepared.
- Penalties will only be abated after payment for the liability and interest (which is not abatable) has been received by the department.
- Taxpayers may not amend returns or request a refund for tax periods that fall within the agreement look-back period.
- The program does not accept refund requests. To request a refund, please follow the instructions for submitting a refund claim.
- Taxpayers may only participate in the program one time for each tax type.
- Taxpayers who have been contacted regarding past due liabilities by the department’s Audit District are ineligible if the agreement period will overlap with the audit period.
- Taxpayers who are under investigation by the department’s Criminal Investigation Unit are not eligible to participate in the program.
- Ongoing compliance is tracked by the program auditors. Failure to uphold the terms of the agreement may result in further investigation or audit.
Multistate Voluntary Disclosure
Taxpayers with undisclosed liabilities in multiple states may consider applying for a multistate voluntary disclosure through the Multistate Tax Commission (MTC). The MTC facilitates disclosure of tax liabilities for multiple states by working directly with each state’s Voluntary Disclosure Program.
Individual Income Tax
Voluntary Disclosure Program participants who are requesting an agreement to remit unreported individual income tax will be required to submit the appropriate income tax forms for each year that will fall within the agreement period. For this reason, taxpayers may not include the most recently closed tax year if an extension will be requested. If the taxpayer has engaged the services of a duly appointed taxpayer representative, a valid Power of Attorney Form 285 will also be required. In order to avoid unnecessary delays which may result in additional interest or involuntary case closure, it is advisable to have these documents completed and available before submitting a Voluntary Disclosure Application (VDA).
Once the application is processed, the assigned case auditor will respond with an introductory phone call and a secure email containing detailed instructions and an unsigned agreement.
Taxpayers who agree to the terms of the agreement and wish to proceed must return the signed agreement to the auditor via email. If the taxpayer has not already furnished the completed income tax returns and Power of Attorney form, 30 days will be afforded to complete and return these documents. Returns can be scanned and emailed to the assigned auditor, or sent to: 1600 W. Monroe St., Division Code 9, Phoenix, AZ 85007. Be sure to include the VDA case number on the returns and payments.
After the returns have been processed, the assigned case auditor will send a billing notice for the tax liability and interest for the period via secure email to either the taxpayer or the duly appointed taxpayer representative. The taxpayer will have 15 days from the notice date to remit payment via www.AZTaxes.gov. Once payment has been received by the department, the assigned case auditor will send the Executed Agreement to the taxpayer or duly appointed taxpayer representative via secure email.
Taxpayers with questions can contact the Compliance Programs Unit by email at [email protected], or by phone at (602) 716-7070.