The Georgia Department of Revenue’s Voluntary Disclosure Agreement (VDA) program was created with the intention of bringing forth otherwise hidden tax dollars that would be sought out in an audit or criminal investigation with exponentially large penalties and interest.
The program encourages taxpayers who have unfiled or underreported tax liabilities and have not yet been contacted by the Department to voluntarily come forward. Qualified participants will usually receive:
- A waiver of all penalties
- A limit on the length of time the taxpayer must disclose and pay previous liabilities
This length of time, called the “look-back” period, is generally three years but can be shorter or longer depending upon a taxpayer’s particular circumstances.
Eligibility
To qualify for the VDA program, the taxpayer (individual or business) must submit an application form and:
- Have not been contacted by the Department for enforcement purposes about that tax obligation (e.g., audit or compliance contact regarding registration or reporting requirements)
- Be compliant with all other Georgia Department of Revenue tax obligations
Penalty Waiver
Penalties will generally be waived for all periods included in the VDA agreement.
However, interest will still be imposed on all amounts due.
Look-back Period
The Department will normally require a look-back period of a certain number of prior periods during which the taxpayer will pay taxes. The length of the look-back period will depend on several factors, including:
- The nature of the taxpayer’s activities
- The size of past years’ potential tax liabilities as submitted in the application
Standard Look-back Period
The look-back period is usually a minimum of three years for all tax types.
Specific Tax Types and Look-back Periods
Individual Income Tax
The Department may extend the look-back period up to five years for taxpayers who:
- Filed their federal income tax returns
- Failed to file Georgia income tax returns for those same years
Sales and Use Tax / Withholding Tax
The look-back period is usually thirty-six months but may be extended as far back as necessary to recover taxes that a taxpayer:
- Collected yet did not remit
Corporate Income Tax
The look-back period depends upon:
- The amount of tax due
- The existence of a net operating loss during the period
Important Consideration
If only a small amount of tax is due for prior periods, the Department will almost never waive any past liability as part of a prospective, going-forward agreement with no look-back period.
Frequently Asked Questions
What is the purpose of Georgia’s Voluntary Disclosure Agreement (VDA) program?
The VDA program aims to encourage individuals and businesses with unfiled or underreported taxes to come forward voluntarily. By doing so, they can avoid severe penalties and limit how far back the state will assess taxes.
Who qualifies for the Georgia VDA program?
To be eligible, applicants must not have been previously contacted by the Georgia Department of Revenue for that tax type. They also must be compliant with other state tax obligations.
Will penalties be waived under the VDA?
Yes, the Department generally waives penalties for all periods covered by the agreement. However, interest on the unpaid taxes will still apply.
How long is the standard look-back period?
The standard look-back period is typically three years. However, the exact duration can vary depending on the tax type, amount owed, and whether prior returns were filed.
Can the look-back period be longer than three years?
Yes. For example, it may extend to five years for individual income tax if the taxpayer filed federal returns but did not file Georgia returns. The period may also be extended for other tax types depending on the circumstances.