Overview of the VDA Process
VDA Intake Form
Kintsugi will send you a VDA Intake Form in Excel format, requesting details generally needed throughout the VDA process. We will also reach out during the process if the state requests any additional information.
Initial VDA Application
Kintsugi will submit the initial VDA application to the states. Where permitted, we will send an anonymous application stating the facts about the business without disclosing any identifiable information. For other states, we will disclose the business name and file the initial VDA application.
Waiting for State Response
Kintsugi will await the state's response and acceptance of the initial VDA application. This can take up to 30 to 60 days in some states.
VDA Process: Once the VDA application is accepted, the state will send a VDA Agreement outlining the terms and required documents, which may include:
VDA Agreement
Registration Form
Power of Attorney Form
Business Activities Questionnaire
Spreadsheet Format or Filing of Sales Tax Returns (some states require businesses to file returns as part of the VDA process)
Preparation and Review of VDA Documents
Kintsugi will meticulously complete all the required documents on your behalf, including the VDA Agreement, Registration Forms, Power of Attorney Forms, Business Activities Questionnaires, spreadsheets, and any necessary tax returns. We will ensure that all information is accurately and thoroughly compiled to meet state requirements. Once the documents are prepared, we will send them to you for your review and signature before submission to the state.
Post-Submission Process
Upon submission of the documents, the VDA agent will assess the tax liability and interest, and send a VDA bill.
VDA Payment
Once a VDA bill is generated, the business will have 30 to 60 days to make a payment. Please note that some states require payment upfront at the time of submitting the documents.
Considerations Before Starting the VDA Process
Accuracy of Information
Provide accurate information to be filled out on the VDA documents.
Cash Flow Management
Check cash flow, as conducting VDAs in multiple states simultaneously will require payment obligations to be fulfilled in a short time frame.
Risk of Rejection and Audit
States can reject the VDA application if the provided information is found to be incorrect or misleading, which can ultimately lead to an audit.
Benefits of VDA
Penalty Reduction or Waiver
Most states offer a full or partial waiver of penalties, significantly reducing the financial impact of previously unreported tax liabilities.
Limited Look-Back Period
VDAs typically reduce the look-back period (often to 3–4 years) instead of the full statutory period (which can extend up to 10 years), limiting the amount of back taxes owed.
Avoidance of Audits
By voluntarily disclosing past liabilities, businesses often avoid a state-initiated audit and the associated penalties for undisclosed liabilities.
Clear Resolution and Future Compliance Path
The VDA provides a defined resolution for past liabilities and establishes a clear framework for future compliance, ensuring the business remains in good standing with the state.