The New York Voluntary Disclosure Program offers a rare opportunity for businesses and individuals to come clean on past tax liabilities—before the state comes knocking. Whether you’ve missed sales tax filings, underreported income, or overlooked use tax obligations, this program can help you resolve it all discreetly and with reduced penalties.
But navigating eligibility, look-back periods, and multi-jurisdictional rules—especially if you also owe New York City taxes—can get tricky. That’s where expert guidance makes the difference. At Hands Off Sales Tax (HOST), we help taxpayers resolve liabilities efficiently through voluntary disclosure—and stay compliant long after.
What Is the NY Voluntary Disclosure Program?
The New York Voluntary Disclosure Program (VDP) is a legal compliance initiative that allows taxpayers to proactively resolve prior tax liabilities—before they’re discovered by state or city tax authorities. Its core purpose is to encourage voluntary compliance by reducing penalties and avoiding criminal prosecution.
Key Features
The New York VDP covers nearly all state-administered taxes, including:
- Sales and use tax
- Corporate franchise tax
- Withholding (payroll) tax
- Personal income tax
- Metropolitan commuter transportation mobility tax (MCTMT)
If you’re eligible and accepted, New York will typically:
- Limit the look-back period to three or four years
- Waive penalties
- Offer protection from civil or criminal prosecution
The program is available for both businesses and individuals, whether in-state or out-of-state, provided you haven’t been contacted yet by the tax department.
State vs. City Disclosure
In addition to the New York State program, New York City operates its own Voluntary Disclosure and Compliance Program (VDCP) for taxes like:
- NYC General Corporation Tax
- NYC Unincorporated Business Tax
- NYC Commercial Rent Tax
Each program has its own process, but both offer significant relief if approached correctly. Choosing the right pathway often depends on your business structure, jurisdiction of liability, and filing history.
Who Is Eligible? Criteria Explained
The New York Voluntary Disclosure Program is designed to give taxpayers a clean slate—but only if they come forward before the state or city initiates contact. To qualify, you must meet specific eligibility conditions that prioritize good faith and voluntary intent.
General Eligibility Requirements
To be eligible for the New York State Voluntary Disclosure Program, you must:
- Not be under audit or investigation for the tax type and period you’re disclosing
- Not have received a bill, notice of deficiency, or assessment related to the liability
- Not have completed a nexus questionnaire or otherwise acknowledged tax responsibility to the state
Even taxpayers with prior fraudulent activity may be eligible—though this can affect how far back the state looks when calculating taxes owed. In some cases, the standard three-year look-back may be extended if fraud is involved, but penalties may still be waived.
NYC-Specific Eligibility
For New York City’s Voluntary Disclosure and Compliance Program, the eligibility rules are similar but apply to city-administered taxes. You must:
- Not have had prior contact from the NYC Department of Finance
- Be willing to fully cooperate and disclose all facts truthfully
Meeting these criteria is critical. Once contact is made by the tax authority—or if you’re under audit—you are disqualified from applying.
Look–Back Periods & Protections
One of the biggest advantages of New York’s Voluntary Disclosure Program is the limited look-back period, which reduces how far back the state or city can require you to pay back taxes—provided you come forward voluntarily and meet eligibility criteria.
Standard Look-Back Period
In most cases, the standard look-back period is three years from the date the application is approved. This means:
- You’re only required to file and pay taxes for the last three years
- Older liabilities (beyond the look-back period) are generally waived
However, the look-back may be extended to up to six years in cases involving:
- Fraudulent behavior or willful evasion
- Substantial underreporting of tax liabilities
Applicants can also request a shorter look-back by providing written justification—particularly if the business was inactive or sales were minimal in prior years. While not guaranteed, the state may grant leniency based on specific facts.
Legal Protections
If your disclosure is approved:
- All civil penalties are waived
- You are protected from criminal prosecution for the disclosed period
This combination of reduced liability and legal protection makes the program one of the most effective tools for regaining tax compliance in New York.
State vs. NYC VDCP Differences
New York offers two separate Voluntary Disclosure and Compliance Programs (VDCPs): one at the state level and another specific to New York City. Both programs help taxpayers resolve past tax liabilities, but they differ in how they operate and what taxes they cover.
NYC Voluntary Disclosure Program (NYC VDCP)
The New York City Department of Finance (NYCDOF) runs its own program for city-administered taxes such as:
- NYC General Corporation Tax
- Unincorporated Business Tax
- Commercial Rent Tax
- Utility Taxes
Key features include:
- Separate application and approval process through NYC DOF
- A strict 30-day deadline to file all required returns after approval
- No shared access with state filings—this is a standalone process
New York State Voluntary Disclosure Program (NYS VDCP)
The New York State Department of Taxation and Finance covers all state-level taxes including:
- Sales Tax
- Personal and Corporate Income Tax
- Withholding and Payroll Taxes
Key features include:
- Online application via the Voluntary Disclosure Portal
- Flexible payment plans available upon approval
- Ability to create joint resolutions for multiple tax types under one disclosure agreement
Understanding the differences between the two programs ensures you pursue the correct compliance path based on your business footprint and tax liabilities.
Step‑by‑Step Application Process
Applying for the New York Voluntary Disclosure and Compliance Program (VDCP)—whether at the state or city level—requires careful documentation and timely follow-through. Here’s how to navigate the process step by step.
1. Identify and Prepare Required Information
Before applying, gather:
- Entity details (name, FEIN/SSN, address, contact info)
- Type(s) of tax involved (e.g., sales, corporate, personal income)
- Tax periods and approximate liability amounts
- A written explanation of why the liability wasn’t previously reported
2. Submit the Voluntary Disclosure Request
- For New York State, apply through the state’s website.
- For New York City, use the secure online application.
You may submit the request anonymously (without identifying the business) until conditional approval is granted.
3. Provide Detailed Disclosures
Once accepted, you’ll need to disclose:
- Exact tax periods
- Amounts due (or reasonably estimated)
- Circumstances that caused non-compliance
This step ensures the department can calculate interest, validate eligibility, and confirm the look-back period.
4. Await Letter of Acceptance
If the application is approved, you’ll receive a letter outlining:
- Required tax filings
- Payment due
- Waiver of penalties and confirmation of immunity from prosecution (if applicable)
5. File Returns and Pay (or Set Up a Plan)
Submit the required returns within the given timeframe—typically 30 days for NYC and 60 days for the state. If needed, arrange for a payment plan through the NYS Tax Department.
What Happens After Approval
Once your application to the New York Voluntary Disclosure and Compliance Program (VDCP) is approved, the process shifts from disclosure to resolution. This is where you finalize your filings and fulfill your tax obligations to lock in the benefits of the program.
File Returns and Make Payment
You must file all required returns and pay the disclosed taxes within 30 days of receiving the approval letter, unless otherwise stated by the Tax Department. Failure to do so may void the agreement.
If you’re working through the NYC VDCP, the city gives a similar 30-day window.
2. Installment Payment Option
If you cannot pay in full, you may request a payment plan. Interest still accrues, but penalties remain waived as long as the plan is honored.
3. Limited Audit Scope
The state or city will not audit beyond the self-disclosed periods—3 to 6 years in most cases—if you meet all conditions.
4. Ongoing Compliance Is Crucial
You must stay current on all future tax filings and payments. Falling out of compliance could invalidate the protections and restart enforcement.
Common Pitfalls & How to Avoid Them
The New York Voluntary Disclosure and Compliance Program offers significant benefits, but only if approached correctly. Several common missteps can jeopardize eligibility or lead to delays.
Waiting for a Notice or Tax Bill
Once you’ve received a bill, audit notice, or nexus questionnaire from the New York State Department of Taxation and Finance, you’re no longer eligible for the VDCP. This includes prior contacts related to the same tax type or period.
Misestimating Taxes or Look‑Back Periods
Applicants sometimes underestimate their liabilities or misunderstand the eligible disclosure window. Most cases are subject to a three-year look-back, but fraud or egregious conduct may extend it to six years. Ensure accurate calculation before submitting.
Ignoring NYC VDCP When Applicable
If you owe taxes to New York City (e.g., NYC General Corporation Tax), you must also apply through the NYC Department of Finance’s separate VDCP. Failure to do so could leave you exposed.
Weak or Incomplete Disclosures
Incomplete filings—missing tax years, vague explanations, or lacking documentation—can delay approval or result in rejection. Use a clear narrative, accurate figures, and supporting documentation wherever possible.
How HOST Simplifies Voluntary Disclosure & Sales Tax Compliance
Navigating a voluntary disclosure program—especially in a state as complex as New York—requires both precision and speed. HOST’s Voluntary Disclosure Agreement (VDA) service is designed to minimize exposure, ensure eligibility, and guide you through every critical step without the risk of missteps.
Expert VDA Handling
HOST helps businesses submit clean, complete disclosure applications under both New York State and New York City VDCPs. From assessing eligibility and calculating look-back liabilities to preparing narrative justifications and coordinating with tax authorities, HOST ensures you stay compliant and penalty-free.
End-to-End Sales Tax Services
Beyond VDA filings, HOST is a one-stop compliance partner offering:
- Sales Tax Registration: Fast, accurate setup in all required states.
- Nexus Analysis: Identify where your business has obligations—before the state does.
- Filing & Remittance: Ongoing sales tax filings, including zero returns and multi-jurisdiction tracking.
- Notice & Audit Response: Immediate handling of tax notices, audit support and defense, and state correspondence.
- Resale Certificate Generation: Through the ResaleCertify tool, you can generate unlimited valid resale certificates for all your vendors for all 50 states.
Whether you’re settling past liabilities or setting up a fully compliant system moving forward, HOST takes the burden off your plate—permanently.
Take Control Before the State Does
The New York Voluntary Disclosure Program is more than a second chance—it’s a smart move for any business that wants to correct tax issues without penalties or legal risk. But timing and accuracy are everything. One misstep could disqualify your eligibility and reopen years of exposure.
That’s where HOST comes in. With expert guidance, hands-on support, and a full suite of sales tax services, HOST makes voluntary disclosure seamless and stress-free. If you’re unsure where to start or want a clear path to resolution, reach out to HOST today for a confidential consultation.
Frequently Asked Questions
1. Who qualifies for New York’s Voluntary Disclosure Program?
To be eligible, you must not be under audit, criminal investigation, or have received a bill or notice for the taxes you wish to disclose. You must voluntarily come forward before the state contacts you about the liability.
2. What taxes are covered under the program?
The program covers nearly all state and local tax types, including sales tax, income tax, withholding tax, corporate franchise tax, and more. There is also a separate Voluntary Disclosure Program for New York City-administered taxes.
3. How far back will I need to file returns?
The standard look-back period is typically three to six years. However, it may be extended in cases involving fraud. In certain situations, taxpayers can request a shorter period by providing reasonable justification.
4. Can I set up a payment plan after disclosure?
Yes. Once your application is accepted and you’ve filed the required returns, you can request an installment payment agreement with the New York Department of Taxation and Finance.
5. What happens if I don’t include NYC taxes in my application?
If your business has exposure to NYC-administered taxes, you must file separately through the New York City Department of Finance’s VDCP. Omitting it could lead to future liabilities and loss of protection.
