Voluntary Disclosure Program

Which Taxes are Eligible?

The following taxes are eligible under the Voluntary Disclosure Program:

• Automobile Rental Excise Tax
• Cigarette & Tobacco Tax
• Corporation Income Tax
• Equipment Excise Tax
• Fiduciary Income Tax
• Franchise Tax
• Hotel Motel Excise Taxes (State and Local)
• Individual Income Tax (including School District Surtax)
• Local Option Sales Taxes
• Motor Fuel Tax
• Prepaid Wireless 911 Surcharge
• Sales & Use Tax
• Water Service Excise Tax
• Withholding Income Tax

Who is Eligible?

The Department has discretion to determine who is eligible for participation in the voluntary disclosure program. In making the determination, the Department may consider the following factors:

1. The taxpayer must be subject to Iowa tax on Iowa-source income or have Iowa tax collection responsibilities and must have tax due;
2. The taxpayer must not currently be under audit or examination by the Department or under criminal investigation by the Department;
3. The taxpayer must not have had any prior contact with the Department or a representative of the Department which could lead to audit or assessment associated with the tax types or tax periods sought to be addressed under the program;
4. The type and extent of activities resulting in Iowa-source income;
5. Failure to report the Iowa-source income or pay any liability was not due to fraud, intentional misrepresentation, an intent to evade tax, or willful disregard of Iowa tax laws; and
6. Any other factors which are relevant to the particular situation.

How Do I Apply?

To apply online: 

1. Go to GovConnectIowa
2. Under the Additional Services panel, select Submit a Voluntary Disclosure Proposal
3. Follow the screen prompts and submit the proposal

To apply by mail: 

You or your representative must submit a written proposal to:

• Nonfiler Unit
  Compliance Bureau
  Iowa Department of Revenue
  PO Box 10456 
  Des Moines, Iowa 50306-0456

You or your representative may initially contact the Department on an anonymous basis. Anonymity of the taxpayer can be maintained until the voluntary disclosure agreement is executed by the taxpayer and the Department.

The following information is helpful when submitting a proposal: 

• The type of tax(es) being applied for.
• A statement that there has been no prior contact with the Department. Please note: per the Department’s standard practices, past contact with the Department relating to the tax type applied for makes an applicant ineligible for voluntary disclosure.
• Brief description of applicant's business activities.
• The date nexus was established for the tax type(s) applied for.
• If income tax is applied for, the applicant’s federal year end date for filings.
• The applicant’s entity type (such as Corporation, LLC filing as a partnership, Financial Institute, etc)
• If applying for permit tax (such as sales tax), a statement that tax has or has not been collected.
• If applying for sales tax, state whether nexus was established due to economic nexus only, or due to physical presence within Iowa. If applicant has nexus based upon both physical and economic presence, the applicant’s nexus start date would be the earliest start date of the two.
• A statement explaining why the applicant did not file returns when due.

What Happens Going Forward?

The voluntary disclosure program may be used by the Department and the taxpayer to report previous periods of Iowa-source income and to settle outstanding tax, penalty, and interest liabilities, but it must also ensure future tax compliance by the taxpayer.

Questions About Iowa Voluntary Disclosure?

• Review Department Rule 19.6: Voluntary disclosure agreements, or
• Email the Department, or
• Call 1-800-367-3388 or 515-281-3114, or
• Send a written request to:
  Nonfiler Unit
  Compliance Bureau
  Iowa Department of Revenue
  PO Box 10456
  Des Moines, IA 50306-0456

Multi-state Voluntary Disclosure

If taxpayers have a liability in more than one state, they may consider applying for multi-state voluntary disclosure through the Multistate Tax Commission (MTC).  More information about the MTC’s Voluntary Disclosure Program and the application for Multi-state Voluntary Disclosure are available at www.mtc.gov/Nexus-Program/Multistate-Voluntary-Disclosure-Program.

License and/or permit holders are encouraged to make voluntary disclosures as soon as any irregularity or instance of noncompliance is discovered in their business operations.

All voluntary disclosures must be in writing and sent to:

• Iowa Department of Revenue
  Alcohol & Tax Compliance Division
  Attn: Alcohol Voluntary Disclosure
  1918 SE Hulsizer Rd.
  Ankeny, IA 50021-3941

Voluntary disclosures may be sent electronically to adminactions@iowa.gov, however, a hard copy mailing is required. License and/or permit holders may also make oral disclosures to appropriate IDR officials if the required written disclosure is made within 10 calendar days of the verbal disclosure.

Any questions on the Voluntary Disclosure Program may be sent to adminactions@iowa.gov.

The Iowa Department of Revenue Alcohol & Tax Compliance Division's Alcohol Voluntary Disclosure Program encourages compliance with the laws and rules administered by the Department by allowing license and/or permit holders to voluntarily disclose potential and actual violations of said laws and rules. In return for disclosure, license and/or permit holders may receive reduced penalties or other special considerations if the Department proposes administrative action be taken.

What is voluntary disclosure?

The Department defines voluntary disclosure as the intentional disclosure to authorized Department officials of material facts by license and/or permit holders regarding potential and actual noncompliance with the laws and rules administered by the Department.

How do voluntary disclosures differ from other disclosures of information by license and/or permit holders?

Under the Voluntary Disclosure Program, license and/or permit holders initiate voluntary disclosures of noncompliance with laws and rules administered by the Department, as well as any irregularities they discover in their operations that are potential violations of said laws or rules. These voluntary disclosures are distinct from disclosures that are required by law or rule, such as submissions of tax reports and other reports of operations.

What are the benefits of voluntary disclosure? 

Voluntary disclosures provide several benefits to license and/or permit holders by: 

1. Reducing costs (time and money) associated with legal investigation and action
2. Potentially resulting in reduced penalties or other special considerations when and if the Department proposes administrative action
3. Providing an incentive for detecting and correcting errors early
4. Allowing the opportunity to obtain special guidance on future compliance
5. Promoting a fair and level playing field, and 
6. Demonstrating credibility, good faith, trust, and confidence that fosters goodwill and a positive working relationship with the Department

Voluntary disclosures also benefit the Department by: 

1. Protecting public health, safety, and welfare
2. Achieving results at reduced cost to the Department
3. Promoting compliance and a fair and level playing field 
4. Fostering cooperative relationships between the Department and license and/or permit holders; and 
5. Enhancing the Department’s abilities to educate license and/or permit holders on compliance issues and reduce future irregularities

When should license and/or permit holders make voluntary disclosures?

License and/or permit holders should make voluntary disclosures as soon as possible after they discover any noncompliance with the law or rule. 

When does the Department accept voluntary disclosures?

The Department considers and may accept voluntary disclosures when a license and/or permit holder meets any of the following conditions: 

1. Disclosure is made before the Department
   1. Discovers irregularities
   2. Begins a formal audit or investigation in which irregularities fall within the scope of the audit or investigation, or 
   3. Finds irregularities that fall outside the scope of a formal audit or investigation 
2. Information is provided to the Department on noncompliant activities, including the details, circumstances, and attempts to prevent recurrences
3. Demonstration is made of steps taken to remedy the irregularities
4. Payment is made of the correct amount of tax owed, if the irregularities involve underpayments or nonpayments of tax 

When do formal audits or investigations start? 

A formal audit begins on the date of the pre-audit letter sent by a Department official to the license and/or permit holder. 

A formal investigation begins either on the date of the letter by which a Department official notifies a license and/or permit holder of an investigation, or, in the case of an unannounced investigation, the date on which the Department official arrives without notice at the licensed premises to conduct the investigation. 

How long does a license and/or permit holder have to pay taxes due if voluntary disclosures involve a tax underpayment or nonpayment? 

License and/or permit holders should submit any tax underpayments or unpaid taxes when irregularities are disclosed. If a license and/or permit holder is unsure of the exact tax liability at the time of disclosure, they may elect to have the Department calculate the tax liability. In such cases, license and/or permit holders must pay the Department the calculated tax within 30 days’ notice of the amount due. 

Does the Department always allow special consideration for voluntary disclosures? 

No. License and/or permit holders are not eligible if irregularities: 

1. Involve fraud or represent willful violations of law that may be referred for criminal investigation/prosecution or 
2. Exist as part of a pattern that involves the same type of conduct that resulted in an earlier voluntary disclosure

How does the Department handle accepted voluntary disclosures? 

The Department ’s senior management discusses such matters with the license and/or permit holder before deciding on administrative action in response to disclosed irregularities. During the decision-making process, the Department takes into account: 

1. The nature and extent of tax deficiencies or other irregularities
2. The timing and completeness of disclosures
3. The license and/or permit holder’s cooperation
4. The prior compliance history of the license and/or permit holder 
5. The actions taken by the license and/or permit holder to prevent future noncompliance, and 
6. Any other contributing factors, mitigating or otherwise

What type of administrative action may the Department take? 

The Department may: 

1. Keep written records of the circumstances on file, without issuance of admonitory or warning letters 
2. Issue admonitory or warning letters that document irregularities
3. Approve settlements of civil liabilities 
4. Suspend a license and/or permit, or 
5. Revoke a license and/or permit

Additionally, the Department may recommend criminal prosecution where it is warranted. Examples where criminal prosecution may be recommended include bribery of public officials, involvement in organized criminal activities, previous obstruction of justice, and particularly flagrant violations of Iowa Code chapter 123. 

Does the Department consider completed voluntary disclosures as first violations in future administrative actions? 

No. The Department does not consider such completed actions as first violations. 

Does the Department maintain a record of voluntary disclosures? 

Yes. Because the ABD treats accepted voluntary disclosures as admissions of noncompliance with laws or rules, records of such matters are maintained for future reference. 

Are voluntary disclosures privileged communications? 

No. Oral and written statements of voluntary disclosure of noncompliance are not privileged communication. 

Where should license and/or permit holders send voluntary disclosures? 

All voluntary disclosures must be in writing and sent to: 

Iowa Department of Revenue 
Alcoholic & Tax Compliance Division 
Attn: Alcohol Voluntary Disclosure 
1918 SE Hulsizer Rd. 
Ankeny, IA 50021-3941 

Voluntary disclosures may be sent electronically to adminactions@iowa.gov, however, a hard copy mailing is required. License and/or permit holders may also make oral disclosures to appropriate ABD officials if the required written disclosure is made within 10 calendar days of the verbal disclosure. 

Who should license and/or permit holders contact with additional questions? 

Additional questions on voluntary compliance should be emailed to adminactions@iowa.gov.