This document summarizes a presentation by Ned A. Lenhart, CPA on voluntary disclosure agreements (VDAs). It discusses: 1. Options for businesses that owe back sales tax, including applying for permits and filing past due returns with penalties and interest, or filing a VDA to waive penalties. 2. How to determine sales tax liability in multiple states, including calculating taxes, penalties, and interest owed based on sales and tax rates. 3. Key details of a VDA, including limited lookback periods, reduced or eliminated penalties, and agreeing to register and collect future taxes. 4. Important considerations for the VDA process like eligibility, timeframes, and common mistakes to avoid

1. G u e s t s p e a k e r : N e d A . L e n h a r t , C P A
August 29, 2017

2. By Ned A. Lenhart, MBA CPA
Ampersand Accounting, LLC
Voluntary Disclosure
Agreement Complexities

3. • Behind on Sales Tax: Options to Move Forward
• How Much Do You Owe –Cash Flow Decisions
• Voluntary Disclosure Agreement Overview
• The Anatomy of a VDA
• VDA Costly Mistakes to Avoid
• Time-Frame to File a VDA
• MTC VDA/Amnesty Program
• LIVE Q & A

4. • Apply for Sales Tax Permits to Collect and Remit
1. Past Date on Sales Tax Application
• Pay Past Sales Tax + Penalties + Interest
• File Past Returns
2. Current Date on Sales Tax Application
• NOT Recommended
• Potential FRAUD Penalties
3. File Voluntary Disclosure Agreement
• Waive Penalties
• In most cases you obtain a sales tax permit in the process
• Look back period is shortened
• Must follow the correct process

5. • Determine the following:
• States with Sales Tax Nexus
• Stock/Inventory (Amazon FBA – 25 States)
• Home State
• Other Factors?
• First Had Nexus in These States
• Total Sales x Sales Tax Rate x Penalties x Interest
• Example
• $10,000 Sales x 7% Sales Tax x 30% Penalties x 3%
• Determine this for ALL States You have Nexus

6. • Tax application asks for date of first sale in state.
• Liability in many states with nexus and taxable sales adds up!
• Knowledge that nexus exists is NOT a factor in historical liability.

7. • May have income tax nexus also if business has property in state.
• Income tax nexus threshold is different than sales tax
• Depending on business, income tax liability may be larger than sales
tax.
• Knowledge that nexus exists is NOT a factor in historical liability.

8. • No statute of limitations for unfiled returns (sales or
income)
• Prospective filing does NOT prevent assessment of
penalties for unfiled periods
• Restructuring business won’t generally limit liability
• Penalties can range from 10% to 50% of tax
• Interest rates range from 5% to 18% per-year

9. • Contractual agreement with a state
• Taxpayer benefits:
• Limited look back period of taxes owed but not collected
collected
• Reduce or eliminate penalties on taxes paid
• Most states allow taxpayers to remain anonymous until VDA complete
• Taxpayer agrees to register and collect tax on future taxable sales.
taxable sales.

10. • Most states have 36 month look-back
• Nevada has 8 year and Hawaii has 10 year
• Texas 48 months (abates penalty and interest)
• Washington 48 months plus current year

11. • Edibility Requirements
• Taxpayer CANNOT have been contacted by state-at any time!
• Taxpayer CANNOT be under audit
• Taxpayer generally CANNOT already be registered for tax
• If tax has been collected, special rules apply

12. • Key States with Payment Plans (Helps Cash Flow):
• California
• Florida
• Illinois
• New York
• Texas
• Generally 25% down and 24 month payment plan
• Rules vary by state

13. • Application filed according to state policy
• Named or anonymous
• State respond with…
• VDA contract,
• Nexus questionnaire, or
• Letter with instructions
• Processing Time Frame: 2 weeks to 60 days
• Response Time Frame: 30 to 45 days
• Complete Returns & Pay Sales Tax Time Frame: 60 to 90 days
• Time frame greatly effected by taxpayer data being in order

14. • Not Knowing Your Numbers First (exempt sales)
• Not Knowing the Time Frame for the Process
• Not Collecting and Remitting Tax During the Process
• Not Knowing When NOT to do a VDA
• Attempting to do VDA on your own!

15. • August 17 to October 17
• 24 states participating in program
• Multistate Tax Commission (MTC) acting as clearing house for applications.
• Agreements are issued by the state not the MTC
• Companies can participate in all or some of the states
• Most states giving total forgiveness of sales and income tax
• Limited to companies with inventory in state. Primarily FBA

16. • Applications are submitted online at the MTC website
• Submitted to the state anonymously by the MTC
• Can be submitted by taxpayer or representative
• Must provide estimates of sales tax and income tax forgiven
• Agree to register and collect tax on transactions starting December 1, 2017
• 14 states non-FBA states-need to evaluate benefit
• Need to have process in place for future compliance

17. • Some vocal FBA sellers arguing that MTC program is not valid and that no
tax is due
• Every taxpayer will need to evaluate the risk they have and whether they
can afford to fight an assessment if caught by state.
• States can legally enforce tax assessments on out-of-state sellers
• States can attach personal assets of owners and officers

18. Schedule and Evaluation and
Recommendation Appointment
E-mail: support@Ampersandaccounting.com
Questions

19. August 29, 2017