The City of Los Angeles has enacted a new Voluntary Disclosure Program ("VDA"), which provides penalty relief for qualified taxpayers who have not registered with the City to report and remit their LA City Business tax. The program becomes effective on October 4, 2011.

Qualifying taxpayers who participate in the program may abate applicable penalties, but not, interest on their delinquent Business Tax liabilities. Taxpayers may also be eligible for reduced look-back periods, limiting the taxpayer’s overall tax exposure.

A "qualifying taxpayer"" must meet all of the following criteria to be eligible for the VDA program

Engaged in business in the City of Los Angeles
Have not previously filed an application for a LA business tax registration certificate or renewal form(s)
Have not been previously contacted by the City regarding delinquent tax liabilities and is not currently under audit or otherwise contesting such liabilities
Voluntarily files an application for business tax registration certificate or renewal form(s) with the city for all years for which taxpayer was engaged in business in Los Angeles
Cooperates with an investigation of the taxes at issues in the VDA and provide all books and records requested
Failure to timely file application for business tax registration certificate or renewal form(s) or to pay taxes was due to reasonable cause and was not due to intentional disregard of the law or fraud or an intent to evade the provisions of the city code
The VDA contains such terms and conditions as are necessary to effectuate the VDA program

During the first year (12 months) of the program, qualifying taxpayers will only be assessed and liable for back taxes for the prior three years, as opposed to the normal eight-year limitation period. However, after the first year of the program, the assessment period will increase to five years.

If you conduct business within the City of Los Angeles, and have not registered for the City Business Tax, please contact one of our professionals in the State and Local Tax Practice to determine if you may be liable for such taxes, and whether you qualify for the VDA program.