Voluntary disclosure program

Overview

The Department of Revenue’s Voluntary Disclosure Program encourages unregistered businesses to comply with Washington tax laws and to voluntarily register and pay prior tax obligations. If your business has established substantial nexus in Washington, and is required to register and report taxes according to WAC 458-20-101, we can assist you in becoming compliant.

Businesses can come forward through the Voluntary Disclosure Program by submitting an online application. The "look back" period is generally limited to four years plus the current year. Penalties will either be partially or fully waived and interest will be imposed at the statutory rate. Upon approval into the program, you are required to complete a Business License Application and pay the application fee.

Benefits of voluntary disclosure

If your business is discovered through the department’s normal investigation, examination, or audit procedures you may be liable for tax, interest, penalties of 39 percent of the tax due, and a “look back” period of seven years plus the current year (WAC 458-20-228 and 458-20-230).

The Voluntary Disclosure Program can offer you the following benefits:

• The “look back” period for your tax liability is limited to the prior four years plus the current year;
• Up to 39 percent in potential penalties can be waived, which include:
  • 5 percent assessment penalty for substantially underpaid tax;
  • 5 percent unregistered penalty; and
  • 29 percent late payment of a return penalty.
• The department can summarize your unreported tax liability in a single tax assessment.

• Note: If you have collected retail sales or use tax but did not remit it there is an unlimited look back period, and the 29 percent late payment of a return penalty will apply only to the collected and unremitted retail sales or use tax amounts (WAC 458-20-228 and 458-20-230).

Full statutory interest will still be imposed on all amounts due.

Who is eligible for the program

To qualify for full voluntary disclosure benefits a business must have:

• Never registered with or reported taxes to the department;
• Never been contacted by the department for enforcement purposes (e.g., audit or compliance contacts regarding registration or reporting requirements); and
• Not engaged in evasion or misrepresentation in reporting tax liabilities.