Sacramento, CA CPA for Voluntary Agreements

Cook CPA Group

Through a voluntary disclosure agreement, taxpayers can receive benefits if they proactively disclose their tax liabilities. Most states offer voluntary disclosure agreements as a way to encourage companies and other taxpayers to come into compliance with the state’s tax laws. In California, companies and taxpayers can enter into voluntary disclosure agreements if they meet certain eligibility requirements; in exchange for disclosing their tax liability information, companies and taxpayers can avoid penalties.

If your business would like to enter into a voluntary disclosure agreement, seek the help of an experienced accountant as soon as possible. A Sacramento voluntary agreement accountant from Cook CPA Group can assist taxpayers move forward from tax issues by entering into a voluntary agreement. To learn more about how Cook CPA Group’s accountants can provide help with voluntary agreements and other tax services, call (916) 432-2218.

Understanding a Voluntary Agreement for Sacramento Businesses

If a business discovered that they have unpaid taxes or are at risk of having unpaid taxes, they can enter into a voluntary disclosure agreement. Many states off them—they are a chance for a business to reduce the number of penalties they face for not having paid their taxes in exchange for full disclosure of information about their liabilities. In a typical voluntary disclosure agreement, states only have a look-back period of three to four years; if a business’s tax exposure extends beyond the look-back period, the liabilities are waived. Businesses can disclose tax information going back up to six years.

Voluntary agreements are commonly used as a method of exposure resolution. If, for example, a company has not registered with tax authorities in a state where they have nexus, a voluntary disclosure resolution can allow them to receive certain benefits in exchange for the disclosure of information about their business connections in that state, the payment of the taxes they owe, and the agreement that they will comply with the state’s tax laws in the future.

Companies can resolve their delinquency by actively working to enter into a voluntary disclosure agreement. During a voluntary disclosure agreement, businesses can protect themselves from future audits, reduce the cost of doing business, and eliminate the possibilities of liabilities connected to future business dealings.

What Is Included in a Voluntary Disclosure Agreement

Voluntary disclosure agreements are centered around the disclosure of information about a company’s tax liabilities. Typical voluntary disclosure agreements in the United States contain the following information:

  • A description of what the taxpayer makes or sells or the service it provides, along with a description of the nature of the transactions that comprise their business
  • A description of the way that the taxpayer markets its services or products
  • A description of the business’s activities that create nexus within the state and the date on which they established nexus
  • A description of the prior contracts that were made between the taxpayers and the department of revenue
  • Information about the taxpayer’s sales taxes and use taxes, whether or not the taxpayer collected taxes from the customer, and whether the taxpayer remitted those funds (use taxes will include a description of the purchases that the taxpayer made but didn’t pay use taxes for)

Voluntary Disclosure Agreements in Sacramento, CA

California’s Franchise Tax Board offers voluntary disclosure programs for both companies that operate in the state and companies that are not based in the state but that have created nexus. It’s important to note that companies cannot enter into a voluntary disclosure program for tax obligations.

Businesses must meet certain eligibility criteria if they would like to enter into ta Voluntary Disclosure Agreement in California. To qualify for a voluntary disclosure agreement in California, taxpayers must meet the following criteria: the entity is a trust, corporation, S Corp, or LLC; the entity has not previously filed for a voluntary disclosure agreement in California; the entity does not possess non-contingent California resident beneficiaries; the entity has not previously been investigated or audited for tax obligation failures; the entity has come forward voluntary to enter into a voluntary disclosure agreement; and is able to make a complete and accurate disclosure that includes a description of all of their taxable activity over the previous six years.

Voluntary disclosure agreements in Sacramento, CA can protect taxpayers from penalties for their tax liabilities. Taxpayers can avoid penalties for the following things in California: failing to make and file a return; failing to pay an amount due to the state; underpaying taxes; failing to provide records or maintain accurate records; failing to file information returns and late filing of partnership returns; and contract voiding. The penalty relief provided by the voluntary disclosure agreement only applies to the years covered in the disclosure agreement.

Voluntary disclosure agreements can be terminated if taxpayers violate the terms of the agreement. This may mean that they misrepresented facts, failed to file returns and pay taxes for the period covered in the agreement, understated tax liability, or failed to comply with California tax law. Some businesses may apply for a voluntary disclosure agreement and be denied. If this happens, they may be eligible for a Filing Compliance Agreement. Visit the Franchise Tax Board’s website for more information about whether your business qualifies.

Sacramento Accounts Available for Help with Voluntary Agreements

If you owe taxes to a taxing authority, a voluntary agreement might be the option for you. The Sacramento voluntary agreement accountants that work with Cook CPA Group can help taxpayers find solutions to any issues they may be facing regarding their taxes. Get in touch with Cook CPA Group today to discuss whether a voluntary disclosure agreement is right for your company. Call (916) 432-2218.

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