Voluntary disclosure offers businesses that haven’t been filing required franchise tax returns a chance to come forward, limit their exposure, and start fresh. For companies that have had Texas filing obligations without realizing it, or that simply fell behind on compliance, the voluntary disclosure program can save significant money.
The program applies to businesses with unfiled franchise tax returns that haven’t been contacted by the Comptroller about an audit or assessment. If the Comptroller has already reached out to you, voluntary disclosure is generally unavailable.
Limited lookback periods provide the primary benefit. Instead of owing tax for all periods you should have been filing, voluntary disclosure typically limits the lookback to four years. If your business has had Texas franchise tax obligations for longer but never filed, eliminating liability for the older years represents substantial savings.
Penalty waivers accompany most voluntary disclosure agreements. You’ll still owe the underlying tax and interest, but eliminating penalties can reduce your total liability significantly. Franchise tax penalties can add 25% or more to your bill, so waiver represents real money.
Anonymity protects you during initial negotiations. Voluntary disclosure requests can be submitted through a representative without immediately identifying your business. If negotiations fail or terms are unacceptable, you haven’t exposed yourself to audit.
The process involves submitting an application, negotiating terms, and executing an agreement. You’ll then file all required reports for the lookback period, pay the calculated liability, and register for ongoing compliance.
Future compliance is required. Voluntary disclosure isn’t a one-time fix that allows you to return to non-filing. You commit to filing all required reports going forward and maintaining accurate records.
Timing matters because the program is only available before the Comptroller contacts you. Waiting risks losing access to benefits that could save your business substantial money.
To determine whether voluntary disclosure makes sense for your franchise tax situation, schedule a consultation with our team.
