A Voluntary Disclosure Agreement (VDA) is an arrangement between a taxpayer and a state’s tax agency that seeks to bring the taxpayer into compliance with state tax laws. In Pennsylvania, the Department of Revenue offers a VDA program to encourage taxpayers who are not in compliance with state tax laws to come forward voluntarily and resolve their tax liabilities.

The VDA program in Pennsylvania offers several benefits to taxpayers, including the waiver of penalties and interest for most taxes, the avoidance of criminal prosecution for noncompliance, and the opportunity to negotiate a payment plan for outstanding tax liabilities. Additionally, taxpayers who participate in the VDA program will not be subject to a tax audit for the period covered by the VDA agreement.

To qualify for the VDA program in Pennsylvania, taxpayers must meet certain eligibility criteria, including having no prior contact with the Department of Revenue regarding the noncompliance issue, having not filed tax returns for the tax type in question, and having no knowledge of any ongoing audit or investigation by the department.

Once a taxpayer submits an application for the VDA program, the Department of Revenue will review the application and determine if the taxpayer is eligible for the program. If the taxpayer is eligible, they will receive a written agreement outlining the terms of the VDA program, including the amount of tax due and the payment plan for outstanding liabilities.

It is important to note that participating in the VDA program does not guarantee that the taxpayer will not be audited for other tax periods or tax types. Additionally, if the taxpayer fails to comply with the terms of the VDA agreement, they may be subject to penalties, interest, and criminal prosecution.

In conclusion, the VDA program in Pennsylvania provides an opportunity for taxpayers to resolve their tax liabilities and become compliant with state tax laws. If you are a taxpayer in Pennsylvania who is not in compliance with state tax laws, consider participating in the VDA program to avoid penalties, interest, and criminal prosecution. Always consult with a tax professional before making any decisions regarding tax compliance.