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Voluntary Disclosure Program

The Voluntary Disclosure Program allows qualified entities, qualified shareholders, or beneficiaries that may have incurred an unpaid California tax liability or an unfulfilled filing requirement to disclose their liability voluntarily.

The qualified entities, qualified shareholders, or beneficiaries that choose to participate in the Voluntary Disclosure Program are required to disclose their California tax liability ONLY for the immediately preceding six taxable years.

Franchise Tax Board (FTB) will waive penalties associated with the return filings. FTB will waive its authority to assess taxes, additions to taxes, fees, or penalties for the taxable years ending prior to the six taxable years covered by the voluntary disclosure agreement.

California Revenue and Taxation Code Section 19191 authorizes FTB to enter into voluntary disclosure agreements with any qualified entities, qualified shareholders, or beneficiaries in order to obtain voluntary compliance with the tax laws of the State of California.

NOTES:


  1. What is a Qualified Entity?
  2. What is a Qualified Shareholder?
  3. What is a Qualified Beneficiary?
  4. What are the Benefits?
  5. Voluntary Disclosure Application Process.
  6. Violation of the Agreement.
  7. What if I do not qualify for the Voluntary Disclosure Program?

  1. What is a Qualified Entity?

    A “qualified entity” is an entity that meets ALL of the following criteria:

    • Is a corporation (including S corporation), limited liability company (not classified as a corporation), or trust;
    • Never filed a return with FTB;
    • The trust has never performed its administration duties in California;
    • The trust has had no resident beneficiaries (other than a beneficiary whose interest in that trust is contingent);
    • Never been the subject of an inquiry by the FTB with respect to liability for any taxes, and;
    • Voluntarily come forward, prior to any unilateral contact with FTB, and makes both an application for a voluntary disclosure agreement and a full and accurate statement of its activities in California for six immediately preceding taxable or income years.

    Even if an entity meets all of the above listed criteria, the entity will not be considered a “qualified entity” and will not be eligible to participate in the voluntary disclosure program if it is:

    • organized and existing under the laws of California;
    • qualified or registered with the Office of the Secretary of State of California; or
    • an entity that maintains and staffs a permanent facility in California. (The storing of materials, goods, or products in a public warehouse pursuant to a public warehouse contract does not constitute maintaining a permanent facility in California.)
  2. What is a Qualified Shareholder?

    A qualified shareholder is an individual who is both of the following:

    1. A nonresident on the signing date of voluntary disclosure agreement; AND
    2. A shareholder in an S corporation that has applied for a voluntary disclosure agreement and who discloses all the material facts pertinent to the shareholder’s liability on that S corporation’s voluntary disclosure agreement.
  3. What is a Qualified Beneficiary?

    A qualified beneficiary means an individual who is all of the following:

    1. A nonresident on the signing date of the voluntary disclosure agreement and a nonresident during each of the six taxable years ending immediately preceding the signing date of the voluntary disclosure agreement.
    2. A beneficiary of a qualified trust that has applied for a voluntary disclosure agreement under this article under which all material facts pertinent to the beneficiary's liability would be disclosed on that trust's voluntary disclosure agreement.
  4. What are the benefits?

    If the qualified entity, shareholder, or beneficiary fully complies with the Voluntary Disclosure Agreement, the Franchise Tax Board may not assess any or all of the following penalties for the taxable years covered by the agreement.

  5. Voluntary Disclosure Program Application

    Qualified entities, shareholders, or beneficiaries that choose to participate in the Voluntary Disclosure Program must complete an Application for Voluntary Disclosure form FTB 4925. To remain anonymous, program applicants may have a representative contact the FTB. Company representatives should not reveal the name of the company or shareholders or any information that could readily identify the company to the FTB until the agreement is executed.

    Any qualified entities, shareholders, or beneficiaries entering into a voluntary disclosure agreement must fully disclose all material facts pertaining to its franchise or income tax liability. The qualified entity, shareholder, or beneficiary has 30 days to file tax returns and pay all applicable taxes and interest once the voluntary disclosure agreement is signed. In addition, the qualified entity, shareholder, or beneficiary must also agree to continue filing tax returns and paying any tax due in the future.

    How to Obtain an Application

    You can download Application for Voluntary Disclosure, form FTB 4925.

    If you need other California tax forms or publications, please visit our Forms and Publications page. The forms and publications are in Adobe's Portable Document Format (PDF). You need Adobe Reader to view and print them.

    If you are unable to download the application, you can request the application (form FTB 4925) be sent to you by writing to:

    TAX FORMS REQUEST UNIT
    FRANCHISE TAX BOARD
    PO Box 307
    Rancho Cordova CA 95741-0307

    The address to mail the completed application for Voluntary Disclosure and required documentation is:

    By U.S. regular mail (This includes U.S. standard postage stamp mail, U.S. priority mail, U.S. certified mail, U.S. registered mail, and U.S. insured mail.):

    STATE OF CALIFORNIA
    VOLUNTARY DISCLOSURE PROGRAM MS F180
    FRANCHISE TAX BOARD
    PO BOX 1779
    RANCHO CORDOVA CA 95741

    By private express mail carrier (This includes Federal Express [Fed Ex], United Parcel Service [UPS], and DHL, but excludes any form of U.S. regular mail.):

    STATE OF CALIFORNIA
    VOLUNTARY DISCLOSURE PROGRAM MS F180
    FRANCHISE TAX BOARD
    9646 BUTTERFIELD WAY
    SACRAMENTO CA 95827

  6. Violation of the Agreement

    The Voluntary Disclosure Agreement will be null and void if the qualified entity, shareholder, or beneficiary:

    • Misrepresents material facts relevant to the agreement;
    • Fails to file returns or pay taxes for the periods covered by the agreement;
    • Reneges on an installment payment arrangement;
    • Understates the tax liability for any year covered by the agreement and cannot show a good faith effort to accurately compute the tax liability; OR
    • Fails to continue to comply with California tax law.
  7. What if I do not qualify for the Voluntary Disclosure Program?
    • If you have concluded that you are not eligible for FTB's Voluntary Disclosure Program, you may apply to enter into a Filing Compliance Agreement.