In continuation of states that have updated their Voluntary Disclosure Agreements (“VDAs”) guidelines, the Pennsylvania Department of Revenue announces significant changes to the eligibility prerequisites for Pennsylvania VDAs, applicable to agreements entered into on or after August 1, 2023.
Specifically this applies to taxpayers with liabilities from Pennsylvania “corporation taxes.” The department revises the “lookback period” for corporation taxes under VDAs. The previous lookback span of five years, along with the current year, has been adjusted to a new framework of three years plus the ongoing year. This is a great change for taxpayers looking to become compliant in the state of Pennsylvania and at the same time limit their liabilities as well as favorable adjustments to the penalties and potentially interest that is owed to the department.
Example provided in the Pennsylvania newsletter states:
The calendar tax year is 2023. The current tax year due is 2022. Tax years 2019, 2020, 2021, and 2022 would be the years included in the VDA. The agreement
would begin with 2019. If 2022 is on extension, the taxpayer would need to send returns for 2019, 2020, and 2021 along with any estimated or extension payments for 2022 under the VDA. If the original or extended due date for 2022 has passed, the taxpayer would be required to send the return for tax year 2022 as well.