Voluntary Compliance Program
The Department encourages businesses and individuals that are not in compliance with Indiana tax laws to voluntarily come forward to register and pay prior tax obligations. The Voluntary Compliance Program is available for taxpayers who don't have a physical presence (example: business location or residence) in Indiana and have been collecting tax (but not submitting it to the State of Indiana) or have not been collecting tax when they should have been. If qualified, the Department will arrange a voluntary compliance agreement with that business or individual.
If you wish to know more about the voluntary compliance program, you may contact the Department anonymously. The Department will not, in any way, seek to identify you. To remain anonymous when making the formal application, you may work with a third-party representative, such as a tax preparer, accountant or attorney.
Qualifying for Voluntary Compliance Program
Qualifying
A written request must answer the following questions:
- Are you an individual, corporation, S-corporation, limited liability corporation, single-member limited liability corporation, partnership or sole proprietor?
- Are you a calendar or fiscal-year filer? If fiscal, state your period ending date.
- A general description of your business.
- Describe your Indiana activities, the date the activities began, principal source of Indiana income, as well as principal source of total income, including whether you do any of the following:
- Own or lease real or tangible property in Indiana
- Have employees or independent sales representatives soliciting sales in Indiana
- Have inventory located in Indiana (identify the amount and type of inventory)
- Make deliveries into Indiana (identify the means of transportation used: either common carrier or company owned vehicle)
- Engage third parties to install, service or repair property sold to Indiana customers
- Provide any type of services within Indiana (explain type of services)
- An estimate of the tax liability for all previous tax periods by tax type, such as income tax, sales/use tax, and/or withholding tax. The Department will not enter into zero tax liability agreements for prior periods.
- A statement as to whether you have collected and not remitted Indiana sales/use, withholding, or any other trust tax.
- A statement that you have not been contacted by the Indiana Department of Revenue.
- A statement that you have not previously filed tax returns in Indiana through a related entity or under a different corporate name.
The above information must be submitted in writing, fax or e-mail to be considered for eligibility for the voluntary compliance program. Requests received without written responses to all of the above concerns will be rejected.
If you need voluntary compliance agreements for more than one organization, please attach a brief letter explaining the facts surrounding the additional requests.
If you are seeking agreements with multiple states, you can visit www.mtc.gov/Nexus.aspx?id=534
Confidentiality
The Department will keep the agreement confidential and will not disclose any terms or conditions of the agreement to any tax authorities of any other state or governmental authority or to any person except as provided by exchange of information agreements.
Disqualification
You will be disqualified and the agreement rendered null and void if any of the following is discovered:
- Previous contact of any kind with the Department
- Misrepresentation of any facts set forth in the Disclosure Agreement
- Failure to comply with the terms of the agreement
Duties of the Department
In exchange for the taxpayer coming forth voluntarily, the Department will agree to:
- Waive civil penalties, except when sales/use, withholding, or any other tax deemed to be a "trust" tax was collected (if trust taxes have been collected and not remitted, the 10-percent negligence penalty will be assessed);
- Waive filing requirements for periods prior to the look-back period; and
- Waive audits prior to the look-back period, unless it is determined that the taxpayer is subject to disqualification as noted above.
Upon approval of all terms and conditions, the Department and the taxpayer will enter into a written agreement.
Basic Terms and Conditions
The basic terms and conditions of the voluntary compliance program calls for a:
- Three-year look-back period for income taxes
- Three-year calendar look-back period for trust taxes such as sales/use tax or withholding taxes
- Current year period to bring you into up-to-date compliance.
If the taxpayer has collected and not remitted Indiana sales/use tax or withholding taxes, or any other tax termed to be a "trust" tax collected, the look-back period will be extended to include all periods that Indiana taxes were collected and not remitted.
If the Department and taxpayer are entering into an income tax voluntary compliance agreement, the taxpayer must file returns for the look-back period. Net-operating losses or any other losses incurred prior to the look-back period may not be carried forward into the Indiana return.
Schedules (may be in Excel or other acceptable format) may be submitted for Indiana sales/use tax or withholding tax look-back periods. The schedules, however, must be broken down by calendar year (three calendar years plus current period).
Payments will be applied in the following order: penalty, interest and tax by year, beginning with the earliest year.
The Department does not have statutory authority to waive interest.
Contact the Department
For more information about the volunteer compliance program, contact Dale Chattin Monday through Friday, 8 a.m. to 4:30 p.m.
Dale Chattin - DOR Mail Stop #104
VCP Office/Indiana Department of Revenue
100 N. Senate Ave., Room IGCN241
Indianapolis, IN 46204
Phone: (317) 233-5162 or Fax: Attn: VCP Office (317) 233-5167
E-mail: VoluntaryCompliance@dor.IN.gov
- Find Indiana tax forms.
- Know when I will receive my tax refund.
- File a nonresident Indiana tax return.
- File my taxes as an Indiana resident while I am in the military, but my spouse is not an Indiana resident.
- Take the renter's deduction.
- Pay my tax bill in installments.
- Claim a gambling loss on my Indiana return.
- Have more time to file my taxes and I think I will owe the Department.
