Companies have the obligations to file and report their taxes to the states where their businesses are operating. Each state will have their own jurisdictions about the taxes applicable for businesses, and depending on the products and services you offer to your customers, you will have different tax liabilities in different states. Local taxation laws will require meticulous attention from any business operating inter-states, as it will cause legal troubles if you don’t think about it beforehand. There are penalties you need to face if your business doesn’t comply with the current local laws regarding taxes.
VDA or Voluntary Disclosure Agreement is the type of legal agreement you can submit to the local jurisdictions, which give your business the upper hand in terms of taxes and liabilities concerning taxes you need to pay later. With the VDA, you can become proactive in disclosing your tax liabilities for the prior period, meaning that you don’t need to worry about receiving tax penalties later in case there are tax problems you need to face. You can also get certain benefits from the state jurisdictions when you submit the VDA tax for your business.
VDA Gives Certain Benefits for Business Taxpayers
In terms of management, operating your business across various states can be a burden, and it can be something you need to put a lot of resources into. However, it can become even more stressful to handle when you add tax laws of various jurisdictions to the equation. Submitting a Voluntary Disclosure Agreement to the state will help you ease various problems that might happen in the future relating to the tax liabilities in your business. With VDA, you are telling the states beforehand about the potential tax liabilities you have in your business, so that the state jurisdictions don’t need to put your business under investigations regarding taxes later. All these can’t be managed by yourself. In order to dedicate more focus on your business you need to have dedicated consultants for various operations of your business.
Here are some benefits of VDA for business taxpayers:
- Minimize the risks for business assessments or audits in the future. The reason for this is that you already tell the states about various tax liabilities you might have in your business. The states won’t need to put your business under suspicion and perform an audit later.
- You can put your business for future taxes beforehand. Your business can get registered for future taxes after you submit the VDA for it. No need for you to submit details about your taxes later, as the VDA submission already gives enough information about your business taxes.
- Minimize the risks of penalties. Penalties can happen when the state jurisdictions consider your business to be evasive toward taxes in their jurisdictions. As a result, they might give you certain penalties, and you might even need to close your business if things go beyond your control. With VDA, you can minimize the risks of penalties because of the transparency between your business and the state jurisdictions even before you operate the business in full in their state.
- Help minimize overall business costs. You don’t need to deal with various additional problems related to taxes and other things, which can cost you a lot of money later. By submitting the VDA, all potential costs in your business operation gets reduced, and you can operate your business with more ease of mind.