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Last Updated: 9/6/2017

Voluntary Disclosure Program

Voluntary disclosure is an ongoing program designed to help businesses come into compliance with Minnesota’s Withholding Tax laws. If you believe your company failed to withhold Minnesota state income tax from compensation paid to its workers or failed to remit tax withheld, this program may provide an opportunity for you to voluntarily correct and/or pay the tax due to the state.
 
You can remain anonymous while deciding whether the program is right for you. We will not try to identify you in any way or do any record searches. If you elect to participate in the program, you must apply in writing.
 

Benefits of Participating:  

  • Possible waiver of some or all penalties, depending on the specific circumstances. 
  • Limit the tax due to just the look-back period.  The look-back period is typically three years.  If you withheld taxes, but did not remit them to the department for periods beyond the normal look-back period, it will be extended to cover those periods.  The look-back period for voluntary disclosure is generally shorter than it would be if the department discovered your noncompliance. 
  • The opportunity to file returns in a spreadsheet format, when applicable, instead of filing a return for each period involved.

Qualifying for Voluntary Disclosure:

To qualify for a voluntary disclosure agreement, your business must:
  
  • Not be under current review for Minnesota Withholding Tax obligations by the Minnesota Department of Revenue. 
  • Agree to register for Minnesota Withholding Tax (if not registered). 
  • Agree to file the returns or spreadsheets specified in the agreement. 
  • Agree to pay the tax due plus any penalty and accrued interest specified in the agreement for the look-back period in the manner specified in the agreement. 
  • At the request of the Minnesota Department of Revenue, make records available for audit to verify liability and the accuracy of your statements.
If you satisfy all the requirements, the department may then enter into a voluntary disclosure agreement with you. The agreement will specify the look-back period and will become effective only when signed by you or your representative. If you fulfill the terms of the agreement, the department will not assess withholding tax, penalty, or interest for any period before the look- back period, nor will the department apply additional penalties beyond those specified in the agreement.
 

Application Process:

If you wish to know more about the Voluntary Disclosure Program, you may contact the department anonymously. The department will not attempt to identify you. To remain anonymous when making the formal application, you may engage a representative, such as a tax preparer, accountant, or attorney.
 
Apply by making a written request. Your request, or “letter of fact,” should contain the following information:
  
  • A statement indicating whether you have been contacted for audit by the Minnesota Department of Revenue. 
  • The state in which your business is located or headquartered. 
  • The number of workers whose withholding was underreported or not reported and whether Form W-2 or 1099 was issued to report the correct amount of compensation and Minnesota tax withheld. 
  • An explanation as to why there is a filing obligation or an underreported tax liability and the reason the filing obligation was not previously fulfilled or the tax not determined properly. 
  • An estimate of the liability for each year you failed to file or underreported Minnesota Withholding Tax. 
  • A statement indicating whether you collected the Minnesota Withholding Tax from the workers. 
  • Contact information, including phone number and email address if one is available, of the person the department should contact.
The department will keep the agreement confidential and will not disclose its terms or conditions to tax authorities of any federal, state or local governmental authority or to any person except as required by exchange of information agreements.
 

Contact Information:

Voluntary Disclosure Program
Attn: Victor Reyes
Minnesota Department of Revenue
Mail Station 5410
St. Paul, MN 55146-5410
Phone: 651-556-4948
Email: Victor.Reyes@state.mn.us