Michigan Voluntary Disclosure Agreement: What You Need to Know

A Michigan Voluntary Disclosure Agreement (VDA) is a way for taxpayers to come forward and disclose past tax liabilities to the state of Michigan. This allows taxpayers to avoid penalties and interest charges that may have accumulated over time.

If you have been doing business in Michigan and have not been reporting your taxes, or if you have received a notice from the Michigan Department of Treasury and are unsure if you have paid all of your taxes, then a Michigan VDA may be a good option for you.

What is a Michigan Voluntary Disclosure Agreement?

A Michigan VDA is an agreement between a taxpayer and the Michigan Department of Treasury where the taxpayer agrees to pay all of their past due taxes, interest, and penalties in exchange for a waiver of certain penalties and interest charges.

The purpose of a VDA is to bring unreported or underreported tax liabilities into compliance with Michigan state tax laws. It is a way for taxpayers to avoid penalties and interest charges that may have accumulated over time.

Who is eligible for a Michigan VDA?

A Michigan VDA is available to any taxpayer who has not been reporting all of their tax liabilities to the state of Michigan. This includes taxpayers who have received notices from the Michigan Department of Treasury.

How does the Michigan VDA process work?

To begin the Michigan VDA process, taxpayers must first contact the Michigan Department of Treasury and express their interest in participating in the VDA program. The taxpayer will then be required to provide the following information:

– A description of the taxpayer’s business activities in Michigan.

– A description of the taxpayer’s past tax liability.

– An explanation of why the taxpayer has not been reporting their taxes correctly.

Once the Department of Treasury has received this information, they will begin a review of the taxpayer’s accounts to determine if they are eligible for a VDA.

If the taxpayer is eligible for a VDA, the Department of Treasury will provide the taxpayer with a preliminary estimate of the taxes, interest, and penalties that are due. The taxpayer will then have 60 days to accept the preliminary estimate and enter into a VDA.

Once the taxpayer has entered into a VDA, they will be required to pay all of their past due taxes, interest, and penalties within a certain timeframe. The Department of Treasury will then waive certain penalties and interest charges.

What are the benefits of a Michigan VDA?

The main benefit of a Michigan VDA is that it allows taxpayers to come forward and disclose their past tax liabilities to the state of Michigan. This can help taxpayers avoid penalties and interest charges that may have accumulated over time.

Additionally, a Michigan VDA can help taxpayers avoid costly and time-consuming tax audits. By voluntarily disclosing past tax liabilities, taxpayers can avoid the uncertainty and stress of a tax audit.

Conclusion

If you have not been reporting all of your tax liabilities to the state of Michigan, or if you have received a notice from the Michigan Department of Treasury and are unsure if you have paid all of your taxes, then a Michigan Voluntary Disclosure Agreement may be a good option for you.

By entering into a VDA, you can avoid penalties and interest charges that may have accumulated over time. Additionally, you can avoid costly and time-consuming tax audits. Contact the Michigan Department of Treasury today to learn more about the VDA process.