When deciding how to get your business sales tax compliant and you have historical exposures, it is important to consider the options available to your business before you get started on registering for sales tax with a jurisdiction.
One option that many states offer to sellers who have not 1) previously registered with the state or 2) received any audit notices from the state, is the option to participate in a Voluntary Disclosure Agreement (VDA). A VDA program’s key benefits are finalizing the outcome around historical exposures and potentially waiving penalties or limiting the lookback period of exposure.
However, for many other sellers the VDA process adds another layer of cost to getting compliant, particularly if VDAs are needed across numerous jurisdictions. The time it takes to prepare for and complete a VDA pushes out the timing for compliance. This can cause a company to accrue more liabilities as they wait for the VDA process to be completed.
Couple this guide with our framework on how to estimate sales tax exposure for software companies. With Anrok, you can automate exposure calculations in real-time and not worry about pricing until you start remitting.
The decision on whether or not to enter into a VDA will ultimately be based on the your company’s risk tolerance.