Rhode Island Voluntary Disclosure Working
- Jan 5, 2012 | Susan McLain
Rhode Island’s Voluntary Disclosure program brought in over $1 million for fiscal year (FY) 2011. This was down, though, from FY 2010, which netted over $2.5 million from the Voluntary Disclosure program. Both years saw about 100 agreements.
Voluntary Disclosure is the process whereby a delinquent business may have a third party contact a state on their behalf to see if the state is willing to reduce or remove penalties if they voluntarily come forward to register and pay their tax liability. According the Rhode Island Taxation Department, “The taxpayer’s representative can write to the Division about the circumstances without identifying the client—thus letting the taxpayer remain anonymous in the early stages.”
If Rhode Island accepts an offer to come forward and register, pay liabilities for specific years to bring the businesses up-to-date, the state generally removes penalties and may also limit the “audit-related look-back period.” Sometimes, a taxpayer may find out, after the fact, that they have a liability to collect and remit sales tax in a state where they previously had no collection duties or liabilities.
Voluntary Disclosure allows the taxpayer to remain anonymous while the voluntary disclosure agreement is negotiated and settled, then the taxpayer files the necessary returns and pays the tax due. In many cases, the “Penalties were waived, but interest still applied.”
If you are concerned whether you have a sales or use tax liability in a state, Avalara’s Tax and Professional Services can help! Our consultants provide services including tax research, nexus studies, registration services and innovative technology solutions to help your company find answers and improve processes.
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