Not every business with unfiled franchise tax returns qualifies for voluntary disclosure. Understanding the eligibility requirements helps you determine whether the program is available and what steps to take.
You must have a franchise tax filing obligation you haven’t met. The program is designed for taxpayers who should have been filing but weren’t. If you’ve been filing returns but underreporting tax, voluntary disclosure doesn’t apply to that situation.
The Comptroller must not have contacted you about franchise tax. If you’ve received an audit notice, assessment, or inquiry letter regarding franchise tax, the voluntary disclosure program is generally closed to you. The program rewards taxpayers who come forward before being discovered.
Contact about one tax type doesn’t necessarily disqualify you for others. If the Comptroller has been in touch about sales tax but not franchise tax, you may still qualify for franchise tax voluntary disclosure even though sales tax voluntary disclosure is unavailable.
Your business must be willing to comply going forward. Voluntary disclosure requires committing to proper registration, timely filing of future returns, and accurate reporting. The Comptroller won’t grant VDA benefits to businesses that plan to resume non-compliance after resolving past issues.
Good faith participation is expected. You must provide accurate information about your business activities and correctly calculate the tax you owe for the lookback period. Submitting misleading information can result in loss of VDA benefits and potential additional penalties.
Certain circumstances create complications. Businesses involved in litigation with the Comptroller, businesses under criminal investigation, or businesses with other pending tax disputes may face additional scrutiny or limitations.
Timing affects eligibility. The benefits of voluntary disclosure are only available while you remain unknown to the Comptroller. An audit notice that arrives tomorrow closes the door on benefits you could have claimed today.
If you’re considering voluntary disclosure for Texas franchise tax, schedule a free consultation to evaluate your eligibility and options.
