This aritcle from USA Today exposes Alabama, California and New Jersey as the only three states that tax health savings accounts (HSA). HSAs are exempt from federal taxes.
The Colorado Department of Revenue outlined the interest rate for overpayments, nonpayments, and underpayments for all 2014 state taxes. Rates will stay at 6%. If the underpayment or nonpayment is paid within 30 days of recieving notice from the state, or is voluntarily paid without notice, the interest rate will be reduced to 3%.
What is a Voluntary Disclosure Agreement?
Voluntary disclosure agreements (VDAs) are legally binding contracts with taxing jurisdictions that are designed to mitigate and settle liabilities.
Benefits of Participating in Voluntary Disclosure Agreement Programs
- Compliance with tax laws.
- Client is allowed to honorably bring their company into compliance.
- Cost savings on back taxes.
- Most jurisdictions have limited look-back periods and forego penalties. (Some jurisdictions might even waive interest!)
- Limited look-back period.
- Generally, if a VDA is submitted and accepted, the taxing jurisdiction will not audit or require filings from the business prior to the look-back period.
- Peace of mind.
- Excellent for due diligence
Characteristics of Voluntary Disclosure Agreement Programs
- Third party anonymously negotiates a settlement with the state.
- Taxpayer responsible for outstanding tax and usually interest.
- Penalties usually waived.
- Limited look-back period (in most states).
- Strict eligibility requirements.
- Taxpayer agrees to file going forward.
- Typically taxpayers do not waive their rights to an appeal or refund.
Voluntary Disclosure Information
- General description of the taxpayer’s business.
- Description of how products or services are marketed in the state and detail on other possible nexus-creating activities in the state.
- Original date nexus or potential nexus occurred.
- Report if sales tax was collected from customers but not remitted.
- General description of purchases made that should have been subject to use tax.
- Description of all previous contacts with the state, either initiated by the taxpayer or the state.
If you have a client who has revenue earned in states where it is not filing a return (either income/franchise or sales/use), consider whether a voluntary disclosure agreement is the best option to bring your client current and save money on penalties and back taxes.
The following Connecticut taxes will have to be filed electronically for periods on or after January 1, 2014:
- Corporation business tax
- Sales and use tax
- Withholding taxes
- Admissions and dues tax
- Business use tax
- Room occupancy tax
- Composite income tax.
For more information you can read the following:
This article from USA Today outlines the problems that states are having keeping up with an economy that is ever shifting from industrial and products based to technological and service based. States are running into resistance as they attempt to implement new technology taxes and service taxes.
This resistance is best illuminated by the backlash the Massachusetts legislature experienced after it passed a sales tax on tech services. The 6.25 percent tax was designed to pay for roads, subways, buses and bridges. But after it passed the tech industry heavily lobbied, and the tax was repealed.
The article also points out that most states do not tax services, and that the taxation of consumer goods can only go so far.
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