Getting Tax Refunds on Voluntary Disclosure Agreements

For any individual, once you give money to the state, getting a refund is not always easy. The language used in some Voluntary Disclosure Agreements (VDA) says that payment is a final settlement and you cannot get your money refunded. So how do you go about ensuring that you hire an expert sales tax firm for advice on your tax needs? 

Michael Fleming, the host of the Sales Tax and More podcast, has all the answers.

Michael is the founder of Sales Tax and More and is one of the country's leading authorities for state tax issues like consulting and research, registrations, returns, nexus, drop-shipping, eCommerce, and service providers. He is a writer, speaker, and regularly presents on webinars.

This week Michael Fleming is interviewed by Dr. Jeremy Weisz where they talk about voluntary disclosure agreements, getting tax refunds, and what to look out for when hiring a tax expert.

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Here’s a glimpse of what you’ll learn: 

  • The sales tax case without a happy ending

  • Getting refunds on voluntary disclosure agreements

  • How to tell if a sales tax firm is experienced

  • Bringing in a subject matter expert

Resources Mentioned in This Episode

Connect with Michael

Sponsor for This Episode

Sales Tax and More assists companies and their trusted advisors like CPAs with sales tax needs. They offer consulting and research, registrations, returns, and so much more. Over the years they have assisted thousands of sellers both foreign and domestic with their tax issues in the United States and in Canada.

Episode Transcript - Audio Version

[0:10] Intro: Welcome to sales tax and more, your go-to resource for all things state tax-related. Now, here's your host, Michael Fleming.

[0:26] Mike: Mike Fleming here. I'm the founder of Sales Tax and More and today's host of the Sales Tax and More Podcast, where we talk about everyone's favorite subject, of course, it's sales tax. And today I have, Jeremy Weiss with us here who's done thousands of interviews with successful entrepreneurs, CEOs, and we're gonna flip the script today. And instead of me interviewing Jeremy, he's gonna interview me.

[0:54] Jeremy: Michael, thank you for having me and just a brief introduction to you. If people don't know you they should listen to more episodes obviously. But Michael Fleming I consider and a lot of people consider one of the USA’s leading authorities when it comes to sales tax. And the episode is brought to you by Sales Tax and More they assist companies and their trusted advisors with their sales tax needs. They offer consulting and research registrations, returns, and much more. And over the years, they've assisted thousands and thousands of sellers, both foreign and domestic with their tax issues in the United States and Canada. So if you have questions, go to SalesTaxandMore.com for more information. And you know, we were talking last time, Michael about there's all these, you know, great outcomes and happy endings. And we're like, Well, why don't we talk about something that maybe didn't turn out so great. And there was one I kind of have here and not everyone is a tax expert. You want to talk a little bit about that.

[1:52] Mike: Yeah, absolutely, and you know, since the Wayfair case Sales Tax has been fairly big news. And it seems that everybody in their sister is all of a sudden a sales tax expert. And, you know, there are lots of good people out there who know sales tax, but there are no or very little courses taught in school. And there are no questions on the CPA exam. Sales tax is something you've learned by doing and accumulate knowledge over the years. So people jumping right in just don't have that depth of knowledge.

[2:36] Mike: And we have one case here where…this is a company that's actually been around a while and they should know better because we heard this not just from one client, but multiple clients and they're doing what we call Voluntary Disclosure Agreements, which helps limit past exposure, but they're doing it for… they're not looking at what clients are selling. So one client, in particular, comes from overseas where pretty much everything is taxable. And they come to the U.S here and they see all of this past exposure they have they're selling on Amazon, they've crossed thresholds, you know, so they want to make sure that they're getting this done correctly. So this company does these voluntary disclosures for them, where they pay in a bunch of money to the state. And you know what, it really is a great tool, but it's not for everybody. And what they did is they made them pay tax on non-taxable items. So now they're taking money out of their pocket, paying it to the state, when there was no need to do that, you know, it just wasn't any exposure there. And, you know, that's bad. Eventually, they realized what was going on. They contacted us and we were able to go back to some of these states and be able to get a refund.

[4:05] Jeremy: Once you give the state money, I'm sure they want to get it back. Right?

[4:10] Mike: Yeah, exactly. And the language in some of these VDA says that you can't get it back and it's a final settlement. So, that was another problem. So there were a bunch of states that we just couldn't get that money back. So, you know, you gotta just because someone says they're tax expert, you got to, you know, get comfortable with their knowledge level. In order before you trust them to represent you in whatever assistance you do need,

[4:38] Jeremy: Are we talking about a lot of money they couldn't recoup or?

[4:43] Mike: Yeah, it was probably about $15,000- $20,000 in total between these sates.

[4:48] Jeremy: So the costly mistake? I don't want to be someone's first surgery. Do you know what I mean? How can someone tell if they're talking to someone knowledgeable? Like they probably saw the firm has been around for a long, long time. And oh, they're trustworthy, even though they don't specialize in sales tax. Is there an indicator people should look at when realizing this person, you know, this firm is experienced or not?

[5:19] Mike: Well, you know, ask them how long they've been offering sales tax services. So they may have been around forever, but if they've just started offering sales tax services, you know, and maybe they hired someone who's a sales tax expert, and that's why they're doing it. So, you know, just, a couple of questions, you know, asking about their, you know, their current client base, who they're offering these types of services to? How long they've been doing it? You know, who do they have doing it? Is it the entire firm or do they have a subject matter expert on hand who all of this goes through? And those are the types of questions and as you talk to the person who's making the decisions. Just get a feel for whether you're comfortable with their knowledge level. I mean, does it make sense? If it doesn't make sense? Or if you are scratching your head and saying, hey, this doesn't sound right. Yeah, it often isn't.

[6:18] Jeremy: Yeah, yeah. Compared to the doctor, like, if you go to the family practitioner and you want heart surgery, they're like, oh, yeah, let's we'll test this out or Yeah if someone from the practice…No, I want someone who all they do is heart surgeries all day long, you know, or, or whatever the specialty is, and I think it applies here, too. If someone is really good at some general tax stuff, it doesn't mean that they necessarily are experts at the sales tax base. Is that right?

[6:42] Mike: Yeah, absolutely. And, you know, there's an analogy I like out there. You since you use the medical analogy, you know, a lot of these people who are new to the party are like, you know, the trusted advisor, that's like that family practitioner and you know, A family practitioner, you know, they're going to run some tests they're going to talk to you see how you feel. And if there's something wrong, they're going to refer you to a specialist. So, you know, I think that all CPAs and, you know, financial advisors, accountants, and you know, everyone along those lines should know a little bit so that they can help protect the clients. These guys are the ones who are speaking to their clients on a regular basis, and it can help their clients understand that there may be issues that they have, and then bring in a subject matter expert if they don't have one on staff.

[7:42] Jeremy: Thank you for sharing Michael something that doesn't always turn out hunky-dory in the end. So if you have questions, go to Salestaxandmore.com and you know, I always tell people like well, you know, I don't care who you have to do your taxes or whatever, always get a second opinion and I know, you know, you can have their firm do a consultation with you and get an assessment and see, you know, do some diagnostics and see where you're at So check out SalesTaxandMore.com

[8:14] Outro: Thanks for listening. Be sure to click subscribe and check out all of the resources we have out on the web.