Sales tax glossary
What is a voluntary disclosure agreement (VDA)?
A voluntary disclosure agreement (VDA) is a formal arrangement in which a business comes forward to a state about taxes it should have collected or paid in the past. In exchange, states typically limit the look-back period and waive some or all penalties. The business still pays the tax owed, plus interest.
Example
A software company learns it passed a state's economic nexus threshold three years ago but never registered. Through a VDA, it pays back tax for a limited period, with penalties reduced or waived.
Why it matters for sellers
A VDA is usually cheaper than waiting for the state to find you, and once a state contacts you, you generally can't use its VDA program. Many businesses start the request anonymously through a representative.
Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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