Many taxpayers discover, sometimes years later, that they had a Louisiana tax obligation they never met. A business may have been selling into Louisiana without collecting sales tax. An out-of-state company may have had employees or operations in the state without filing corporate returns. An individual may have earned Louisiana income and never filed a state return.
Whatever the cause, the worry tends to be the same: what happens when the state finds out? The Louisiana Department of Revenue (LDR) offers a program designed for exactly this situation, the Voluntary Disclosure Agreement (VDA). For eligible taxpayers, it may offer a way to come into compliance on more favorable terms than waiting for the state to make the first move.
What Is a Louisiana Voluntary Disclosure Agreement?
A VDA is a written agreement between an eligible taxpayer and LDR to report tax liabilities that were never disclosed to the state. In exchange for coming forward, registering, and paying the tax and interest owed for a limited period, the taxpayer may receive relief from delinquent penalties.
According to LDR's program guidance, the program is available for most taxes the Department administers, including:
- Individual income tax
- Sales and use tax
- Corporation income and franchise tax
- Severance taxes, including oil and gas severance tax
- Excise taxes (motor fuels tax is excluded)
The program is meant for liabilities the state does not yet know about. That timing element is central to whether a taxpayer can use it at all.
Who May Qualify?
Generally, a taxpayer may be considered for a VDA if they:
- Have a filing or payment obligation for a tax administered by LDR
- Are not currently registered with LDR for that tax
- Have not filed returns, extensions, or payments for that tax
- Have not been contacted by LDR about the liability or potential liability
A business that acquired another company through a purchase or merger may also request a VDA on behalf of the acquired entity, as long as that entity would have qualified on its own. In that case, only the acquired company's undisclosed taxes from before the acquisition are eligible.
Who Generally Does Not Qualify?
The program has firm limits. A taxpayer generally will not be eligible if:
- They are already registered for the tax, even if they stopped filing
- They have already filed returns, extensions, or made payments for that tax
- LDR has already contacted them about the liability, including contact to begin an audit
- The issue is one that would routinely generate a bill from LDR anyway
- The request involves non-filing affiliates of a taxpayer already contacted for audit
In short, once LDR reaches out, the VDA door for that tax usually closes. Taxpayers who do not qualify typically must file the required returns and pay the tax, interest, and penalties, though they may still be able to request a penalty waiver for reasonable cause.
What Are the Potential Benefits?
The two most significant benefits of a Louisiana VDA are penalty relief and a limited look-back period.
Penalty relief. Once the tax and interest for the look-back period have been paid, LDR generally waives delinquent penalties. A VDA does not reduce the tax itself, and interest generally remains due. There is an important exception: when a business collected tax from customers but never sent it to the state, penalty relief is considered only on a case-by-case basis.
A limited look-back period. Without a VDA, a taxpayer may be held liable for every period in which returns should have been filed. Under a VDA, the look-back period generally covers the current calendar year and the three calendar years immediately before it. That window is set when LDR receives the application. Again, collected-but-unremitted tax is treated differently, and the look-back may extend to every period in which collected tax was not paid over.
For a taxpayer with many years of exposure, limiting how far back the state looks can make a meaningful difference in the overall liability.
How Does the Process Work?
The process generally begins with Form R-60010, Application to Request Voluntary Disclosure Agreement. The application must include all required information before LDR will consider it.
One feature many taxpayers find reassuring is that the application can be made anonymously through an authorized representative, such as an attorney or CPA. The taxpayer's identity generally does not need to be revealed until both the taxpayer and LDR have signed the agreement.
If LDR determines the taxpayer appears to qualify, it sends a blank VDA to the taxpayer or their representative. The agreement must then reflect all of the facts and representations about the taxpayer's situation, and LDR reviews the available information before deciding whether to enter into it. Accuracy and completeness matter here, since the agreement rests on what the taxpayer discloses.
A note on local sales taxes: LDR does not handle voluntary disclosures for sales taxes administered by local tax authorities. Those generally go through the Louisiana Uniform Local Sales Tax Board, so a business with both state and local exposure may need to address each separately.
How Bryson Law Firm Can Help
Timing is often the deciding factor with a VDA. Because eligibility generally ends once LDR makes contact, taxpayers who suspect they have unreported Louisiana tax obligations may benefit from evaluating their options sooner rather than later.
At Bryson Law Firm, our team can review your situation to help determine whether a Voluntary Disclosure Agreement may be available, which tax types and periods may be involved, and whether other options, such as a reasonable cause penalty request, may be worth considering. As your authorized representative, we can also submit the application on your behalf while you remain anonymous and handle communications with LDR throughout the process.
If you are concerned about past-due Louisiana taxes, contact Bryson Law Firm today to schedule a consultation and learn whether voluntary disclosure may be the right path forward for you or your business.
