North Carolina – DOR Announces Changes to Voluntary Disclosure Program

SALT Report 1178 – The North Carolina Department of Revenue (DOR) has announced changes to its Voluntary Disclosure Program that will result in more taxpayers being able to participate in the program.

Effective November 1, 2011, taxpayers will only be required to file past due returns and pay back taxes due for a period of three years for taxes filed annually, or 36 months for those that do not have an annual filing frequency.

Prior to the change, taxpayers were required to file and pay at least four years or 48 months of returns. Also, under the previous criteria, a taxpayer who had been registered or had filed a return for a particular tax would not be eligible for the VDP for that tax type. However, the new changes will allow taxpayers who may have previously registered and submitted returns to participate.

To qualify for the Voluntary Disclosure Program, a taxpayer must meet all of the following criteria:

  • The taxpayer has not been contacted by the Department of Revenue, Internal Revenue Service or Multistate Tax Commission with respect to any tax for which the taxpayer is requesting voluntary disclosure.
  • The taxpayer does not have outstanding tax liabilities other than those reported through the voluntary disclosure.
  • The taxpayer is not under audit for any tax.
  • The taxpayer pays the tax due plus accrued interest within 60 days from the date of acceptance by NCDOR of the voluntary disclosure agreement.
  • The taxpayer makes records available for audit to verify the amount of the taxpayer’s liability and the accuracy of the representations made by the taxpayer.
  • Must comply with all tax laws for all state tax schedules after the disclosure.
The VDP was created to promote compliance among taxpayers who discover, without being contacted by the DOR, that they have failed to file the required tax returns or pay any taxes due. In exchange for voluntarily coming forward, the DOR will waive penalties in certain circumstances and allow taxpayers an expedited process for filing taxes.
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