South Dakota Voluntary Disclosure Agreement

South Dakota Voluntary Disclosure Agreement: What You Need to Know

Businesses operating in South Dakota or planning to start operating in the state may find themselves facing certain tax obligations. However, if you have not yet started collecting and remitting taxes, or if you have come to realize that you have missed some tax liabilities, you may want to consider a South Dakota Voluntary Disclosure Agreement (VDA).

What is a South Dakota VDA?

A VDA is a program designed to encourage businesses to voluntarily come forward and disclose previous unpaid taxes. It is an agreement between the South Dakota Department of Revenue and the business that is designed to settle the tax liability.

By participating in the VDA program, the business can avoid penalties and interest on unpaid tax liabilities. The program is available for all types of taxes, including sales and use tax, excise tax, and other state and local taxes.

Who is Eligible for a South Dakota VDA?

A VDA is available to any business that has not previously registered with the South Dakota Department of Revenue or has not filed returns or paid taxes. It is also available to businesses that have underreported their tax liabilities in the past.

What are the Benefits of Participating in a VDA?

The primary benefit of participating in a VDA is the waiver of penalties and interest on unpaid taxes. Additionally, businesses that participate in the program will avoid possible legal action and complications.

Moreover, by participating in the VDA program, businesses demonstrate good faith to the South Dakota Department of Revenue, which could lead to a better working relationship with the department if the business operates in the state in the future.

How to Participate in a South Dakota VDA?

To participate in the VDA program, businesses must submit a written application to the South Dakota Department of Revenue. The application must include specific information, such as the type of tax liability, the period in which the tax liability occurred, the estimated amount of tax liability, and more.

Once the department receives the application, it will review it and notify the business if it has been accepted into the program. If accepted, the department will work with the business to reach a settlement agreement, which will include the agreed-upon amount of the tax liability, payment terms, and other conditions.

Conclusion

A South Dakota VDA can be an effective way for businesses to settle their tax liabilities with the state. By participating in the program, businesses can avoid penalties and interest on unpaid taxes and avoid possible legal action. If you believe that your business may have unpaid tax liabilities, consider contacting the South Dakota Department of Revenue to explore the VDA program.