1. Alabama Department of Revenue Christy Vandevender Tax Policy & Research Division

2. Agenda Voluntary Disclosure Voluntary Disclosure State of Alabama Voluntary Disclosure Program State of Alabama Voluntary Disclosure Program Multistate Tax Commission Multistate Tax Commission Multistate Tax Commission Voluntary Disclosure Program Multistate Tax Commission Voluntary Disclosure Program Overview Overview Q&A Q&A

3. Voluntary Disclosure

4. What is Voluntary Disclosure? Taxpayer voluntarily reveals itself for unpaid tax liabilities. Taxpayer voluntarily reveals itself for unpaid tax liabilities. A delinquent taxpayer discloses information not previously reported to a tax agency, and by doing so voluntarily, avoids penalties or prosecution normally associated with prior non- disclosure. A delinquent taxpayer discloses information not previously reported to a tax agency, and by doing so voluntarily, avoids penalties or prosecution normally associated with prior non- disclosure.

5. Alabama Voluntary Disclosure Program

6. AL Voluntary Disclosure Program The Department of Revenue has provided a voluntary disclosure program to encourage businesses that are not in compliance with the Alabama tax laws to come forward voluntarily to register and bring their tax accounts into compliance. The Department of Revenue has provided a voluntary disclosure program to encourage businesses that are not in compliance with the Alabama tax laws to come forward voluntarily to register and bring their tax accounts into compliance. This program is administered by the Tax Policy and Research Division of the Department. This program is administered by the Tax Policy and Research Division of the Department. The voluntary disclosure program is offered as a service to the taxpayer. The voluntary disclosure program is offered as a service to the taxpayer.

7. AL Voluntary Disclosure Program The taxpayer can come forward anonymously and disclose their name upon signing the agreement. The taxpayer can come forward anonymously and disclose their name upon signing the agreement. The Department will in no way seek to identify those taxpayers who wish to remain anonymous. The Department will in no way seek to identify those taxpayers who wish to remain anonymous. To remain anonymous when making initial contact, the taxpayer may engage representation from a tax preparer, accountant or attorney. To remain anonymous when making initial contact, the taxpayer may engage representation from a tax preparer, accountant or attorney.

8. AL Voluntary Disclosure Program In order to be considered for the voluntary disclosure program, the applicant must not have been “contacted” by the Department or an agent of the Department, such as the Multistate Tax Commission, nor filed a tax return for seven years prior to the initial written request for voluntary disclosure. In order to be considered for the voluntary disclosure program, the applicant must not have been “contacted” by the Department or an agent of the Department, such as the Multistate Tax Commission, nor filed a tax return for seven years prior to the initial written request for voluntary disclosure.

9. AL Voluntary Disclosure Program Contact includes, but is not limited to: Contact includes, but is not limited to: Receipt of a nexus questionnaire Receipt of a nexus questionnaire A delinquent or billing notice A delinquent or billing notice A telephone call A telephone call An audit or notice of audit An audit or notice of audit Payment of tax, including payment of estimated tax Payment of tax, including payment of estimated tax Registration for tax Registration for tax Registration with the Secretary of State Registration with the Secretary of State

10. AL Voluntary Disclosure Program Contact includes, but is not limited to: Contact includes, but is not limited to: Filing of a return, including a request for extension of time to file Filing of a return, including a request for extension of time to file Response to an application for a Certificate of Good Standing or Certificate of Compliance, by the taxpayer, or on behalf of the taxpayer Response to an application for a Certificate of Good Standing or Certificate of Compliance, by the taxpayer, or on behalf of the taxpayer The Department considers contact and the filing of returns on a tax-by-tax basis. The Department considers contact and the filing of returns on a tax-by-tax basis.

11. AL Voluntary Disclosure Program Taxes eligible for Voluntary Disclosure include: Taxes eligible for Voluntary Disclosure include: Corporate income taxes Corporate income taxes Business privilege taxes Business privilege taxes Withholding taxes Withholding taxes Sales and Use taxes Sales and Use taxes

12. AL Voluntary Disclosure Program The Department does not enter into agreements for individual income tax liabilities, unless the taxpayer is a nonresident shareholder and the S-corporation will file composite returns on their behalf. The Department does not enter into agreements for individual income tax liabilities, unless the taxpayer is a nonresident shareholder and the S-corporation will file composite returns on their behalf. The Department of Revenue will not enter into Voluntary Disclosure Agreements with entities organized under Alabama law who wish to come forward for Business Privilege tax. The Department of Revenue will not enter into Voluntary Disclosure Agreements with entities organized under Alabama law who wish to come forward for Business Privilege tax.

13. AL Voluntary Disclosure Program In general, this program is not open to taxpayers who have at sometime filed returns and/or qualified to do business and have fallen behind in their filing responsibilities. In general, this program is not open to taxpayers who have at sometime filed returns and/or qualified to do business and have fallen behind in their filing responsibilities. Zero returns will not be accepted through the Voluntary Disclosure Program. Zero returns will not be accepted through the Voluntary Disclosure Program.

14. AL Voluntary Disclosure Program If a taxpayer is considering, or in the process of, entering Alabama’s Voluntary Disclosure Program, they should make sure not to initiate any kind of contact or filing, e.g. registering with the Secretary of State or filing an extension, until the request for Voluntary Disclosure has been received by the Department. If a taxpayer is considering, or in the process of, entering Alabama’s Voluntary Disclosure Program, they should make sure not to initiate any kind of contact or filing, e.g. registering with the Secretary of State or filing an extension, until the request for Voluntary Disclosure has been received by the Department.

15. AL Voluntary Disclosure Program The Voluntary Disclosure Program has a mandatory three-year look-back period. The Voluntary Disclosure Program has a mandatory three-year look-back period. The three-year look-back period is calculated by determining the last three tax years (or 36 months) which are past due at the time of initial application for Voluntary Disclosure. The three-year look-back period is calculated by determining the last three tax years (or 36 months) which are past due at the time of initial application for Voluntary Disclosure.

16. AL Voluntary Disclosure Program If the taxpayer has collected Sales, Use, or Withholding tax without remitting them, the look-back period will be extended to include all periods in which Sales and Use and/or Withholding tax was collected. If the taxpayer has collected Sales, Use, or Withholding tax without remitting them, the look-back period will be extended to include all periods in which Sales and Use and/or Withholding tax was collected.

17. AL Voluntary Disclosure Program Responsibility of the Taxpayer Responsibility of the Taxpayer Enter into a binding agreement with the Department for at least a three-year look- back period. Enter into a binding agreement with the Department for at least a three-year look- back period. File all returns, with required supporting documentation, for the period(s) specifically outlined in the agreement within 90 days of the effective date of the agreement. File all returns, with required supporting documentation, for the period(s) specifically outlined in the agreement within 90 days of the effective date of the agreement. Remit all tax and interest due as agreed upon. Remit all tax and interest due as agreed upon.

18. AL Voluntary Disclosure Program The following actions will make the Voluntary Disclosure Agreement null and void: The following actions will make the Voluntary Disclosure Agreement null and void: Misrepresentation of any facts set forth in the initial letter of contact. Misrepresentation of any facts set forth in the initial letter of contact. Failure by the taxpayer to comply with the terms of the agreement. Failure by the taxpayer to comply with the terms of the agreement.

19. AL Voluntary Disclosure Program Taxpayer Benefits of Voluntary Disclosure: Taxpayer Benefits of Voluntary Disclosure: Limited look-back period. Limited look-back period. Spreadsheets are allowed, in lieu of returns, for withholding taxes; and sales and use taxes. Spreadsheets are allowed, in lieu of returns, for withholding taxes; and sales and use taxes. The Department agrees to waive late file and late payment penalties and the taxpayer will be billed directly for interest. The Department agrees to waive late file and late payment penalties and the taxpayer will be billed directly for interest. One central point of contact for all taxes being disclosed. One central point of contact for all taxes being disclosed. No cost to taxpayer for participation in program. No cost to taxpayer for participation in program.

20. AL Voluntary Disclosure Program Department Benefits of Voluntary Disclosure: Department Benefits of Voluntary Disclosure: Taxpayer compliance resulting in increased revenues. Taxpayer compliance resulting in increased revenues. No resources used locating taxpayer, proving a filing obligation exist, and auditing of taxpayer; resulting in cost savings to the State. No resources used locating taxpayer, proving a filing obligation exist, and auditing of taxpayer; resulting in cost savings to the State. One central point of contact for all taxes being disclosed. One central point of contact for all taxes being disclosed.

21. Multistate Tax Commission

22. The Multistate Tax Commission is an intergovernmental state tax agency working on behalf of states and taxpayers to administer, equitably and efficiently, tax laws that apply to multistate and multinational enterprises. The Multistate Tax Commission is an intergovernmental state tax agency working on behalf of states and taxpayers to administer, equitably and efficiently, tax laws that apply to multistate and multinational enterprises. The commission was created in 1967. The commission was created in 1967.

23. Multistate Tax Commission The Commission has been a voice for preserving the authority of states to determine their own tax policy within the limits of the U.S. Constitution. The Commission has been a voice for preserving the authority of states to determine their own tax policy within the limits of the U.S. Constitution. The Multistate Tax Commission is funded by its member states. The Multistate Tax Commission is funded by its member states.

24. Multistate Tax Commission The Commission is charged with: The Commission is charged with: Facilitating the proper determination of State and local tax liability of multistate taxpayers, including the equitable apportionment of tax bases and settlement of apportionment disputes. Facilitating the proper determination of State and local tax liability of multistate taxpayers, including the equitable apportionment of tax bases and settlement of apportionment disputes. Promoting uniformity or compatibility in significant components of tax systems. Promoting uniformity or compatibility in significant components of tax systems. Facilitating taxpayer convenience and compliance in the filing of tax returns and in other phases of tax administration. Facilitating taxpayer convenience and compliance in the filing of tax returns and in other phases of tax administration. Avoiding duplicative taxation. Avoiding duplicative taxation.

25. Multistate Tax Commission Voluntary Disclosure Program

26. Multi-state Voluntary Disclosure allows a non- filer with potential liability in multiple U.S. states (including the District of Columbia) to negotiate a settlement agreement regarding back liability on favorable terms through a single point of contact and a single, uniform procedure. Multi-state Voluntary Disclosure allows a non- filer with potential liability in multiple U.S. states (including the District of Columbia) to negotiate a settlement agreement regarding back liability on favorable terms through a single point of contact and a single, uniform procedure.

27. Multistate Tax Commission Voluntary Disclosure Program The Multi-state Voluntary Disclosure Program is administered by the National Nexus Program, a division of the Multistate Tax Commission. The Multi-state Voluntary Disclosure Program is administered by the National Nexus Program, a division of the Multistate Tax Commission. The Multi-state Voluntary Disclosure Program is offered as a service to the taxpayer. The Multi-state Voluntary Disclosure Program is offered as a service to the taxpayer.

28. Multistate Tax Commission Voluntary Disclosure Program Taxes eligible for the Multi-state Voluntary Disclosure Program include: Taxes eligible for the Multi-state Voluntary Disclosure Program include: Corporate income taxes Corporate income taxes Business privilege taxes Business privilege taxes Withholding taxes Withholding taxes Sales and Use taxes Sales and Use taxes

29. Multistate Tax Commission Voluntary Disclosure Program Limited lookback period would be consistent with AL Voluntary Disclosure Program. Limited lookback period would be consistent with AL Voluntary Disclosure Program. Mandatory 3 years or 36 months Mandatory 3 years or 36 months If the taxpayer has collected Sales, Use, or Withholding tax without remitting them, the look-back period will be extended to include all periods in which Sales and Use and/or Withholding tax was collected. If the taxpayer has collected Sales, Use, or Withholding tax without remitting them, the look-back period will be extended to include all periods in which Sales and Use and/or Withholding tax was collected.

30. Multistate Tax Commission Voluntary Disclosure Program A non-filer may apply directly to states for voluntary disclosure. However, when more than one state is involved, the non-filer will find multi-state voluntary disclosure to be faster and more efficient, and therefore less costly. A non-filer may apply directly to states for voluntary disclosure. However, when more than one state is involved, the non-filer will find multi-state voluntary disclosure to be faster and more efficient, and therefore less costly. There is no charge to a taxpayer or its representative for participation. There is no charge to a taxpayer or its representative for participation.

31. Multistate Tax Commission Voluntary Disclosure Program In order to be eligible for the Multi-state Tax Commission Voluntary Disclosure Program, the taxpayer must not have been contacted by the state or the commission. In order to be eligible for the Multi-state Tax Commission Voluntary Disclosure Program, the taxpayer must not have been contacted by the state or the commission. Contact for the Multi-state Voluntary Disclosure program has the same meaning as described for the AL Voluntary Disclosure Program. Contact for the Multi-state Voluntary Disclosure program has the same meaning as described for the AL Voluntary Disclosure Program.

32. Multistate Tax Commission Voluntary Disclosure Program The Commission does not process disclosures when the good-faith estimate of tax due is less than $500. The Commission does not process disclosures when the good-faith estimate of tax due is less than $500. Taxpayers with minimal back liability may wish to contact the state directly for a voluntary disclosure agreement. Taxpayers with minimal back liability may wish to contact the state directly for a voluntary disclosure agreement.

33. Overview Alabama Voluntary Disclosure Program Alabama Voluntary Disclosure Program Best choice if taxpayer is remitting taxes to AL only. Best choice if taxpayer is remitting taxes to AL only. If tax liability is $0, taxpayer would be eligible for state program. If tax liability is $0, taxpayer would be eligible for state program. Multistate Tax Commission Voluntary Disclosure Program Multistate Tax Commission Voluntary Disclosure Program Best choice if taxpayer is remitting taxes to multiple states. Best choice if taxpayer is remitting taxes to multiple states.

34. Overview AL Voluntary Disclosure Program: AL Voluntary Disclosure Program: http://revenue.alabama.gov/analysis/voluntary- disclosure.cfm http://revenue.alabama.gov/analysis/voluntary- disclosure.cfm Multistate Tax Commission Voluntary Disclosure Program: Multistate Tax Commission Voluntary Disclosure Program: http://www.mtc.gov/Nexus-Program/Multistate- Voluntary-Disclosure-Program http://www.mtc.gov/Nexus-Program/Multistate- Voluntary-Disclosure-Program

35. Questions? Christy Vandevender 334-242-1380 Christy.Vandevender@revenue.alabama.gov