A Texas voluntary disclosure agreement allows eligible businesses to resolve unreported sales tax liabilities before being contacted by the Texas Comptroller.
The process generally includes:
- Determining when Texas nexus began
- Estimating back tax liability
- Submitting an anonymous application
- Negotiating lookback terms
- Filing and paying under agreement terms
Voluntary disclosure must occur before enforcement contact to preserve eligibility.
Run Your Nexus Risk CheckStep 1 : Determine When Texas Nexus Began
Before initiating voluntary disclosure, determine:
- When the 500000 revenue threshold was exceeded
- Whether physical presence created earlier nexus
- Whether inventory or employees triggered obligations
Accurate nexus determination defines the exposure window.
Texas Economic Nexus Threshold
Step 2 : Estimate Total Back Tax Exposure
Businesses should calculate:
- Total taxable Texas sales
- Applicable state and local rates
- Estimated penalties
- Accrued statutory interest
Underestimating exposure can complicate negotiations with the Comptroller.
Step 3 : Submit Anonymous Application
Texas voluntary disclosure typically begins through an anonymous submission made by a representative.
This allows:
- Protection of business identity during review
- Negotiation of lookback period
- Clarification of exposure prior to full disclosure
Eligibility is generally limited to businesses not yet contacted for audit.
Texas Voluntary Disclosure Agreement
Step 4 : Negotiate Lookback Period
A primary benefit of voluntary disclosure is limiting the number of years subject to assessment.
The lookback period depends on:
- Nature and duration of exposure
- Cooperation during the process
- Complexity of the revenue structure
Limiting the review period can significantly reduce total liability.
Step 5 : Register, File, and Remit
Once agreement terms are finalized, the business must:
- Obtain a Texas sales tax permit
- File required returns for agreed periods
- Pay negotiated tax and interest
- Maintain ongoing compliance
Failure to comply may void agreement protections.
Common Mistakes in Texas Voluntary Disclosure
- Registering before evaluating exposure
- Waiting until after receiving an audit notice
- Failing to determine accurate nexus start date
- Underestimating taxable sales
Proper nexus analysis should precede registration.
Considering Voluntary Disclosure in Texas
If your business may have unreported Texas sales tax exposure, determine eligibility before contacting the Comptroller.
Run Your Nexus Risk CheckIdentify potential Texas exposure before enforcement limits options.
Texas Voluntary Disclosure Process FAQ
Can I apply after receiving an audit notice?
Eligibility is typically limited once the Comptroller initiates contact.
Does voluntary disclosure eliminate penalties?
Certain penalties may be reduced depending on the facts and negotiation terms.
How long does the Texas voluntary disclosure process take?
Timing depends on complexity, exposure amount, and negotiation factors.
