New York Tax Department’s Voluntary Disclosure and Compliance Program

If you become aware of the fact that you’ve failed to report and pay tax due to New York State, don’t think that it will go away.  It will only get worse.  Penalties, interest and especially criminal charges are serious business. The New York Tax Department has a Voluntary Disclosure and Compliance Program that you can avail yourself of.

The Program allows a taxpayer who owes back taxes can avoid penalties (not always interest) and criminal charges by applying to the program which entails being forthcoming and truthful about that total tax owed, paying (or arranging for a payment plan to pay) the back taxes, and agreeing to pay all future taxes.  If accepted into the Program the taxpayer will have to enter into an agreement with New York State, and file the back returns and pay or enter into a payment arrangement with the Department.

Taxpayers eligible for the Program are those that:

  • are not currently being audited by the Department for  what they are disclosing
  • have not received a bill for the taxes that they are disclosing
  • not be under criminal investigation by a New York State agency or State subdivision; and
  • not be seeking to disclose participation in a tax avoidance transaction (i.e. tax shelter)

The Program is open to any taxpayer that meets the above items, and owes back taxes, even if the failure to report and pay was intentional, or the result of fraudulent or criminal conduct. Generally the information reported is not used against the taxpayer unless that taxpayer violates the terms of the agreement. The Tax Department can and likely will share the information it receives with the IRS (you would want to file to apply for the IRS’s Voluntary Disclosure Practice at the same time) and other New York agencies.

If you or your company owe back taxes its in your best interest to calculate what is due and hire an attorney to assist in applying for acceptance into the Program.