The Alabama Department of Revenue (ALDOR) provides a Voluntary Disclosure Program as a service to our business taxpayers, who are not in compliance with Alabama tax laws, that want to voluntarily come forward to register and become compliant with their tax filing obligations. In order to be accepted into the program the business taxpayer, for seven years prior to the receipt date of the initial written request, must have not been registered, filed a state tax return, made a tax payment, or have been contacted by ALDOR or an agent of ALDOR, such as the Multistate Tax Commission.
ALDOR considers contact and the filing or payment of returns on a tax-by-tax basis, so if a taxpayer has been contacted or filed or paid a return for one type of tax, it will not disqualify the taxpayer from entering the program for other tax types.
Entering Into a Voluntary Disclosure Agreement
The Voluntary Disclosure process is managed through the My Alabama Taxes portal. Business taxpayers or their representatives who wish to enter into a Voluntary Disclosure Agreement should review the following information and submit an application through My Alabama Taxes.
Taxes Eligible for a Voluntary Disclosure Agreement
ALDOR will enter into an agreement for most tax types.
ALDOR does not enter into Voluntary Disclosure Agreements for sales and use tax with no tax liability.
A State Voluntary Disclosure Agreement does not apply to non-state administered localities in Alabama. The taxpayer must directly contact each non-state administered locality in which it has nexus to negotiate separate voluntary disclosure treatment.
ALDOR does not enter into agreements for individual income tax liabilities. However, if an individual taxpayer is a nonresident shareholder or partner of a pass-through entity entering into a Voluntary Disclosure Agreement, such entity will file composite returns on the individual’s behalf.
This program is not open to taxpayers who have at some time filed returns or qualified to do business and have fallen behind in their filing responsibilities within seven years prior to the submission date of the application.
If accepted into the program, ALDOR agrees to waive late file and late payment penalties.
Section 40-18-80.1, Code of Alabama 1975, provides a fee for the underpayment of estimated tax in an amount determined by applying the underpayment rate established by U.S.C. §6621. Since this is technically an interest charge and not a true penalty, taxpayers who have filed income tax returns under the terms of a Voluntary Disclosure Agreement will not receive a waiver of the estimated interest.
Nexus determinations will not be made through the Voluntary Disclosure Program. The completion of the Nexus Questionnaire is required before submitting the Voluntary Disclosure application. The Nexus Questionnaire can also be found on the My Alabama Taxes portal. Taxpayers must have their nexus position in place before the application is submitted online with the “Potential Voluntary Disclosure Applicant” indication on the nexus questionnaire.
In the event that nexus was arguable or if there is no evidence that nexus existed during the three-year look-back period, the representative may proceed through the normal registration process. However, the burden of proof is on the taxpayer.
Responsibility of the Taxpayer
To participate in the Voluntary Disclosure Program, the taxpayer must:
- Enter into a binding agreement with ALDOR for at least a three-year look-back period.
- File all returns and forms for the period(s) specified in the agreement within 90 days of ALDOR’s signature date of the agreement.
- Remit all tax and interest due as agreed upon.
Responsibility of the Third-Party Representatives
Third-party representatives who do not already have an Agent (AGT) account with ALDOR must register for a Bulk Filer/Agent account before submitting applications or questionnaires for their clients in My Alabama Taxes using the link below: https://www.revenue.alabama.gov/ultraviewer/viewer/basic_viewer/index.html?form=2021/10/BF1.pdf
Three-Year Look-Back Period
The Voluntary Disclosure Program has a mandatory three-year look-back period.
The three-year look-back period is calculated by determining the last three tax years (or 36 months) which are past due as of the date the application is submitted online. For example, corporate income tax returns are generally due three and a half months after the tax year end. If ALDOR receives an application online in July 2023 for corporate income tax on behalf of a company that has a fiscal year end of May 31, 2023, the look-back period would not include the tax year ending May 31, 2023, since this return is not due until September 2023. In this case, the look-back period would include tax years ending May 31, 2020 – May 31, 2022.
If the taxpayer has collected, but not remitted, sales, use, rental, lodgings, mobile telecommunications service, or withholding tax, the look-back period will be extended to include all periods in which tax was collected and not remitted.
The effective date of the agreement is established as the date the application is submitted online.
The taxpayer may be disqualified and the agreement rendered null and void if any one of the following is found:
- Previous contact of any kind by ALDOR or an agent of ALDOR within seven years prior to the submission of the application online regarding potential liability for the type of tax identified in the agreement, such as:
- A request to complete a nexus questionnaire
- A telephone call
- An audit or notice of audit
- Payment of tax
- Registration for tax
- Registration with the Secretary of State
- An extension payment
- An estimated tax payment
- The filing of a return
- The taxpayer is currently under audit by ALDOR or an agent of ALDOR.
- Misrepresentation of any facts set forth in the application.
- Failure by the taxpayer to comply with the terms of the agreement.
NOTE: If a taxpayer is considering, or in the process of, entering Alabama’s Voluntary Disclosure Program, no contact or filing of any kind should be initiated (e.g., registering with the Secretary of State or filing an extension) until the application has been submitted online.
The negotiation, execution, and terms of the agreement will not be actively discussed with any taxing authorities or any state or governmental authority or with any person or party, except as such disclosures are following the state’s confidentiality laws. ALDOR has certain exchange of information agreements in place that allow it to exchange tax information with other taxing authorities. The information contained in the Voluntary Disclosure Agreement may be released as specified in the exchange of information agreements, either through a request for general information or through a request for specific information.
Voluntary Disclosure Returns and Payments
Voluntary Disclosure returns and payments may be mailed to the address below.
Sales, use and rental tax return worksheet must be emailed to the email address below.
Electronic payments may be remitted through My Alabama Taxes.
If the Voluntary Disclosure returns and payments are not received in accordance with the Voluntary Disclosure Agreement, the taxpayer may be billed for penalties, in addition to interest.
If you have any questions regarding Voluntary Disclosure, please contact:
Alabama Department of Revenue
Voluntary Disclosure Program
3140 Gordon Persons Building
50 North Ripley Street
Montgomery, AL 36132