Four features of state voluntary disclosure.

The Four VDA Features

Look-back3-4 YearsPenaltyAbatedInterestTypically ChargedBindingAgreement

VDA features.
Feature Typical Terms2
Look-back 3-4 years limited period
Penalty Abated in full
Interest Typically assessed
Agreement Binding protection

Quick Reference

Jump to: look-back, penalty, interest, or agreement.

1. Look-back Period

Typically 3-4 years limited from full statute exposure.

If this is you: Multi-year non-compliance. VDA limits look-back from unlimited (non-filer) to 3-4 years. Material reduction in retroactive exposure.

Look-back Strategy

  1. Inventory non-compliance period.
  2. Identify optimal VDA state.
  3. Prepare exposure analysis.
  4. Submit pre-contact.
  5. Complete disclosure within look-back.

2. Penalty Abatement

Full penalty abatement typical in VDA.

If this is you: Avoiding 25%+ failure-to-file and accuracy penalties. VDA eliminates penalties. Interest typically unaffected.

3. Interest Assessment

Interest typically charged on back tax.

If this is you: Prepare for interest on underpayment. Not abated in most VDA programs. Factor into exposure analysis.

4. Binding Agreement

Binding protection against enforcement for disclosed periods.

If this is you: Certainty important. VDA closes the matter for disclosed periods. Future compliance required going forward.

VDA consideration? Book consultation.

VDA Document Lookup

VDA docs.
Document Purpose
State VDA application Initial submission
MTC VDA Multi-state coordination
Exposure analysis Tax calculation
VDA agreement Binding terms
Returns for look-back Amended / delinquent filings

VDA Statute

  • Standard statute suspended during VDA process.
  • Look-back limits exposure.
  • Future statute runs normally.

VDA Patterns

VDA outcomes. Source: Brotman Law practice.
Situation Outcome
Pre-contact VDA Limited look-back + no penalty
Post-contact VDA typically unavailable
Multi-state exposure MTC VDA streamlines
Complete disclosure Binding resolution

VDA Process

Anonymous Inquiry

Some states permit anonymous preliminary inquiry.

Formal Application

Identified submission with exposure.

Negotiation

Terms finalized.

First 48 Hours

  1. Inventory states and periods.
  2. Calculate exposure.
  3. Evaluate VDA eligibility.
  4. Anonymous inquiry if available.
  5. Engage counsel.

★Brotman Law handles state voluntary disclosure. Based in San Diego.

The ROI Question

VDA limits look-back and abates penalties. Typically saves 50%+ versus audit outcome.

Dealing with Multistate Tax Exposure?

Multistate obligations don’t announce themselves — most businesses accumulate sales tax, income tax, or payroll tax exposure in other states without realizing it until they’re contacted or audited. If you’re selling across state lines, have remote employees, or aren’t sure where your business has nexus, a brief review can identify where you have exposure and what to do about it.

Review My Multistate Exposure →    Or call: (619) 378-3138

When to Engage

  • Pre-contact non-compliance.
  • Multi-state exposure.
  • Large back-tax liability.
  • Anonymous inquiry phase.

VDA question?

15-min consultation free.

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