What can happen if I don’t come forward to register and the Department discovers me first?
If you don’t voluntarily come forward to register and your business is first discovered through the Department’s normal audit, examination, or investigation procedures, you may be fully liable for:
Tax for the prior seven years plus the current year;
Note: If you have collected and unremitted retail sales tax, there is no limit to how far back the Department can go to assess for this tax.
- Penalties of 35 percent of the tax due; and
- Statutory interest.
Do I first need to register with the Secretary of State’s office before contacting the Department for voluntary disclosure?
While it is strongly advised that you contact the Secretary of State’s office to establish your legal entity registration, it is not required. You can still approach the Department to request voluntary disclosure.
I registered for my legal entity license with the Secretary of State’s office only, but did not complete a business license registration with any state agency. Am I still eligible?
Yes. The requirement is that you must never have been registered with the Department of Revenue.
What if I just want to come forward and immediately disclose my identity, register, and pay my liability without signing a formal agreement? Can I do so?
All businesses coming through the Voluntary Disclosure Program must complete the online application and have a signed agreement in place. The Department will expeditiously work with you to bring your account up-to-date and assist you in becoming compliant. All benefits of the Voluntary Disclosure Program will be afforded to you if you qualify.
Will the income figures and tax classifications I provide when I come forward be accepted without verification by the Department?
The Voluntary Disclosure Program will work with you to identify your business activities and determine the proper tax classification(s). You may be required to provide documentation, substantiation, exemption certificates, etc. to support any preferential rates, deductions, exemptions, or tax incentives that you are claiming. All assessments under the Voluntary Disclosure Program are qualified to allow for future field audit verification.
Is there a benefit for me to apply anonymously instead of disclosing my identity upfront?
Generally, no. Your application for voluntary disclosure cannot be approved until the identity of the business is disclosed. To expedite the approval process, it is suggested that the applicant disclose their identity in the application upfront. If you choose to remain anonymous, you only have 15 calendar days to disclose your identity. If disclosure is not made by that date, your application will not be approved and you must reapply for the program.
What happens if I submit application anonymously, and forget to disclose my identity by the 15th day?
If you do not disclose your identity within the 15 calendar day period, your application for voluntary disclosure will not be approved and you will need to re-apply for the program. After the 15 day period, you will not be afforded any protection from discovery by the Department.
I submitted my application anonymously and am now ready to disclose my identity. How do I do so?
You will receive an email from a Voluntary Disclosure Program representative shortly after submitting your anonymous application. You will be asked to disclose your identity directly to the representative you will be working with.
What happens if I don’t get my signed agreement returned by the 30th day?
If you do not return the Voluntary Disclosure Agreement by the due date then your application will not be approved and any tax and interest owed could be subject to an extended look back period of seven years plus the current year as well as penalties of up to 39 percent of the tax due. For delinquent taxes paid on or after August 1, 2015, new penalty rates apply (9%, 19%, 29%). See Special Notice - Late Payment Penalties Increase for additional information.
Do I still maintain my appeals rights if I come through the Voluntary Disclosure Program?
Yes. You have the right to appeal any action, decision, or assessment made by the Department in accordance with WAC 458-20-100.
Can the Department still audit those periods that I am coming forward to disclose?
Yes. The period covered by the Voluntary Disclosure Agreement remains open and is qualified to allow for future field audit verification.
Can I request additional relief, such as a waiver of tax or interest, beyond what is traditionally provided through the Voluntary Disclosure Program?
No. All applicable tax, penalties, and interest must be applied in accordance with statute. The Voluntary Disclosure Program, which is administered by the Audit Division, does not have settlement authority. If you would like to request further assistance please refer to WAC 458-20-100 regarding appeals.
If I am already registered with the Department, can I come forward to report my additional liability?
While you won’t qualify for a standard agreement, we encourage you to come forward and become current in your reporting. If you are registered and determine that you have unreported or underreported income for prior periods, you will need to file an amended return(s).
Late payment return penalties up to 29 percent may be applied if you originally filed no business or zero returns, were on active non-reporting status, or your original returns were filed late. For delinquent taxes paid on or after August 1, 2015, new penalty rates apply (9%, 19%, 29%). See Special Notice - Late Payment Penalties Increase for additional information. In addition, the 5 percent assessment penalty for substantially underpaid tax may also apply if you underreported your liability by 20 percent or more.
As a registered business, the statute of limitations for amending returns is the prior four years plus the current year, unless you have collected retail sales tax and not remitted it or there is evidence of evasion or misrepresentation (RCW 82.32.050).