Businesses that have been operating in New York without properly reporting and remitting sales tax — whether because they did not know they were required to collect it, because they collected it but did not remit it, or because they never registered — face a clear choice: address the past compliance issues proactively through voluntary disclosure, or wait for the New York Department of Taxation and Finance [ DTF ] to find the problem and face a full audit with full penalties.
New York's Voluntary Disclosure Program is specifically designed for this situation. It provides a structured, formal pathway to achieve compliance with reduced penalties, without the adversarial dynamic of a DTF-initiated audit. This article explains how to use the program specifically for the most common scenario: a business that has unreported sales tax liability and wants to get right with the state before the DTF comes knocking.
While our office is based on Long Island, we guide businesses through the NYS voluntary disclosure process throughout New York State.
The fundamental question: has the DTF already contacted you
The voluntary disclosure program is available only to taxpayers who have not yet been contacted by the DTF regarding the tax type and periods being disclosed. This is the gating question that determines whether voluntary disclosure is an option.
Contact means any communication from the DTF specifically regarding a sales tax obligation for a specific period — an audit notice, a delinquency notice for an unfiled return, a demand for payment, or any other official communication from the DTF indicating it is aware of the specific non-compliance being disclosed.
A business that received a general registration inquiry, or that has compliant filed returns for some periods and non-compliant periods for others, may still be eligible for voluntary disclosure for the non-compliant periods — the eligibility analysis is specific to the periods and issues being disclosed. An experienced sales tax attorney can evaluate whether the DTF contact that occurred forecloses voluntary disclosure for the periods in question.
Preparing for voluntary disclosure: what you need to know first
Before submitting a voluntary disclosure application, the taxpayer or their representative needs to understand the scope of the past non-compliance. This means identifying which sales tax filing periods had unreported liability, estimating the amount of the liability for each period, and understanding why the non-compliance occurred — both to explain it to the DTF and to ensure it does not continue after the disclosure.
The liability estimation does not need to be perfectly precise at the application stage, but it should be reasonably accurate. The DTF will review the disclosed liability as part of the process, and significant understatement of the disclosed liability can create problems with the closing agreement.
The anonymous pre-application: testing the waters
New York's voluntary disclosure program allows taxpayers to submit an anonymous preliminary application — describing the situation without identifying the taxpayer — to ask whether the DTF would accept a voluntary disclosure. This step costs nothing and creates no commitment, but provides valuable information about whether the program is available in the specific situation.
If the DTF indicates it would accept the disclosure, the taxpayer can then submit the formal application with their identifying information, confident that the program is available. If the DTF indicates it would not accept the disclosure — because it already has information about the taxpayer's non-compliance — the taxpayer knows this before revealing their identity.
After voluntary disclosure: maintaining compliance
Voluntary disclosure resolves past non-compliance — it does not prevent future non-compliance. The closing agreement that concludes the voluntary disclosure process typically includes a commitment by the taxpayer to maintain compliance going forward. A business that completes voluntary disclosure and then falls back into non-compliance within a few years has not solved its problem — it has simply created a new one, without the option to use voluntary disclosure a second time for the same tax type.
Building correct sales tax compliance practices — proper registration, correct collection, timely filing and remittance — is as important as the voluntary disclosure itself. For the filing obligations that must be maintained going forward, see our guide on filing NYS sales tax.
Why work with an experienced New York sales tax attorney
NYS sales tax matters are not like federal tax issues. The New York State Department of Taxation and Finance has its own procedures, its own auditors, and its own enforcement playbook — and it moves aggressively. Voluntary disclosure is a one-time opportunity for each tax type. Using it correctly — with the right lookback period negotiation, accurate liability computation, and properly structured closing agreement — is the difference between a good outcome and one that leaves problems unresolved. Here is what an experienced New York sales tax attorney brings to the table:
- Deep knowledge of DTF audit procedures. We know how auditors are trained, what indirect methods they use, and where their assessments can be challenged. Generic tax help is not enough here.
- Direct negotiation with the Tax Department. We communicate with the DTF on your behalf from day one — protecting you from statements that can be used against you and positioning the case correctly from the start.
- Personal liability protection. NYS sales tax is a trust fund tax. If your business owes it, the state can and will pursue you personally. An attorney identifies and limits that exposure before it becomes a personal financial crisis.
- Knowledge of every resolution option. From installment agreements to Voluntary Disclosure to formal appeals — we know which path fits your situation and how to negotiate the best possible outcome.
- Local presence, statewide reach. Our practice is based on Long Island and focused exclusively on New York tax problems. We are not a national call center. When you work with us, you work directly with an attorney who knows New York State tax law from the inside.
Speak with a New York sales tax attorney
If you are dealing with a voluntary disclosure inquiry for unreported NYS sales tax, multiple years of non-compliance you want to address before the DTF contacts you, or a question about whether voluntary disclosure is available in your specific situation, do not wait for the situation to escalate. The sooner you have qualified representation, the more options remain available to you.
Contact our office to speak directly with a New York sales tax attorney. While our office is based on Long Island, we represent businesses and individuals facing NYS sales tax problems throughout New York State — from New York City and Long Island to Westchester, the Capital Region, the Hudson Valley, and beyond. Call us or use the contact form at Tax Problem Law Center to schedule a consultation.