Voluntary Disclosure Program
The Office of Tax and Revenue (OTR) encourages businesses and individuals who are not in current filing their District tax returns to come forward voluntarily to bring their accounts in compliance with the District’s tax laws. If a taxpayer or business has failed to pay District taxes or has transactions on which taxes should be paid, the taxpayer may contact the Voluntary Disclosure Unit in OTR to make satisfactory arrangements to clear their tax record.
Taxpayers can remain anonymous during the initial application process, OTR will not assess any penalties or late fees on the disclosed periods, primarily all electronic processes.
To submit a VDA application you will go to MyTax.DC.gov and select “Submit VDA”
Note: If a taxpayer has been contacted by OTR or its representatives (i.e. Multistate Tax Commission or RSI Enterprises), has been filing intermittently, has unreported income on filed return, or is currently registered and has filed returns for the specific tax type, the taxpayer is not eligible for the Voluntary Disclosure Program.
For Taxpayers that are ineligible, you may contact the Voluntary Disclosure Unit (vda@dc.gov) for an alternative method to bring your account into compliance.
The Audit Division of OTR's Compliance Administration administers the Voluntary Disclosure Program. A voluntary disclosure offer may be submitted to Voluntary Disclosure Unit at OTR, but approval authority is vested in the Audit Division Chief, Assistant Audit Division Chief, or Supervisory Tax Auditor.
For any questions regarding the Voluntary Disclosure Program, please contact the VDA Division at vda@dc.gov.
Voluntary Disclosure Program General Guidelines
OTR’s position on voluntary disclosure agreements is determined by the facts and circumstances in each separate disclosure. The following are general guidelines for any voluntary disclosure applicant:
- Any taxpayer can apply to remedy any tax obligation under voluntary disclosure except for tax liability under the authority of the Real Property Tax Administration and Qualified High technology Company liabilities.
- In most cases, the Voluntary Disclosure Unit in OTR will agree to limit the look-back period to three years or the date when the taxpayer established nexus in the District of Columbia.
- For sales or gross receipts tax cases, if the taxpayer collected sales tax or reimbursement for gross receipts tax from their customers, but did not remit the tax to the District of Columbia, the look-back period imposed will be the greater of three years or the date nexus was established in the District of Columbia.
- If the tax liability in certain cases is a substantial amount, OTR may agree to establish a payment agreement through the Collection Division, if an adequate amount is paid up front. However, if the taxpayer misses one scheduled payment, the agreement could be considered as null and void. The Voluntary Disclosure Unit in OTR reserves the right to assess additional penalty and interest on the remaining balance of tax due at that time.
- For nonprofit organizations that already have their tax-exempt status approved by OTR, voluntary disclosure may be used to cover unreported Unrelated Business Income (UBI) from prior years. The UBI reported to the District of Columbia should be the same as the UBI reported or required to be reported to the US Internal Revenue Service. Corporations report UBI to the District of Columbia using Form D-20; all others use Form D-30.
- If a nonprofit does not already have their tax-exempt status approved by OTR, they must file Form FR-164, Application for Exemption, and report any prior-year UBI. Nonprofits can also use the voluntary disclosure process to report any prior-year taxes (i.e. franchise, personal property, sales, use, arena, etc.) that should have been paid.
- The District of Columbia has enacted legislation which requires sellers without a physical presence in the District to collect and remit sales tax if they had, in the previous calendar year, or will have, in the current calendar year, more than $100,000 of gross receipts from retail sales delivered into the District or more than 200 separate retail sales delivered in the District. This new requirement is effective as of January 1, 2019. Additionally, the legislation required marketplace facilitators, as defined by new D.C. Code § 47-2001(g-5), to collect and remit to the District sales tax on sales made on their marketplaces. This requirement is effective as of April 1, 2019.