Unfiled Utah Taxes? Options for Individual and Business Taxpayers

If you haven't been filing your Utah state taxes, the Tax Commission has a couple of programs that may help you: 

• Fresh Start – individual income tax
• Voluntary Disclosure Program – business taxes

Both of these programs waive penalties, and the Voluntary Disclosure Program also limits the lookback period (aka the number of returns you need to file to get back into compliance) for qualifying applicants. Wondering if these are the right programs for you? Then, keep reading for an overview, or use TaxCure to connect with a Utah-based tax professional in your area today.

Utah's Fresh Start for Individual Income Tax

Utah offers a Fresh Start program to help individual taxpayers who have fallen behind on filing their state returns and paying their state income tax. If you qualify, the state will limit or waive the penalties assessed against you and will not pursue criminal prosecution against you. 

To qualify, you must file the returns before the state contacts you and asks for them. In other words, you must come forward voluntarily. You do not qualify if any of the following have already happened:

• The Tax Commission has filed a lien against your property.
• You have been subpoenaed or ordered to file under a Writ of Mandate. 
• The Tax Commission has sent you at least three billing notices.
• Your wages are being garnished for unpaid taxes.
• Your property is being seized for unpaid taxes.
• The Tax Commission has taken other legal actions to get you to file.

To apply, you must file the unfiled returns and send a letter to the Tax Commission:

Fresh Start Program
Waiver Unit
210 North 1950 West
Salt Lake City, Utah 84134

However, you may want to consult with a tax attorney to ensure that you're navigating this process correctly. On the one hand, you cannot qualify if you've already filed the returns, but on the other hand, you must file the returns so that you can get a fresh start. It all boils down to the right timing. Often, you can just send the returns with your request letter, but again, you should consult with a tax pro who has experience in this state to ensure you get the best results possible. 

Do you need to pay the taxes to get a Fresh Start?

Yes, to qualify, you must pay the taxes and interest due before the Tax Commission will approve your request for a Fresh Start. Then, they may waive the penalties and agree not to prosecute you for tax crimes. 

How many years of returns do you need to file?

The Utah State Tax Commission website does not specify how many years you need to file to get back into compliance. To make sure you're hitting the mark, you should consult with a tax pro.

For example, the IRS generally only requires people with unfiled returns to file the last six years of returns. However, the agency may require more years if you have significant income or if you didn't file due to fraud.

What if you have questions about the program?

If you have questions, you can reach out to a tax pro on Tax Cure, or you can email the state directly at [email protected]. Consider putting "Fresh Start" in your email and including a list of questions. Be aware, however, that sending an email may get you onto the state's radar, and if you don't follow up with a formal Fresh Start request promptly, they may start the audit or assessment process, which can prevent you from qualifying. 

What if I can't afford to pay?

Generally, you need to pay the tax and interest to qualify for the penalty waivers. But in some situations, the state may consider letting you make payments. Qualifying taxpayers may even be able to settle for less through a Utah offer in compromise.

Why should I use TaxCure to find a Utah-based tax pro?

Tax pros based in Utah have dedicated experience dealing with the State Tax Commission. They understand its rules, processes, and how to negotiate the best outcomes for their clients. In contrast, the big tax relief firms often lack state-specific experience. They may not be familiar with Utah's offerings, and the last thing you want to to accidentally alert the state about your unfiled returns before you're ready to get back into compliance. 

Does the IRS offer a Fresh Start Program?

The IRS had a Fresh Start program about 15 years ago, but that was not for taxpayers with unfiled returns. Instead, it was a series of procedural and policy changes that made it easier for taxpayers to get out of tax debt. However, you may hear about the IRS's Fresh Start Program in advertising – a lot of the big tax relief firms love to use this phrase in their marketing, and they often talk about it like it's a real program that you can apply for. 

Utah's Voluntary Disclosure Program

The Voluntary Disclosure Program is designed to help taxpayers with unfiled and unpaid business taxes get back into compliance with the state. If you qualify, the state will waive the penalties and give you a limited look-back period. However, to get approved, you must reach out to the state before they contact you. 

If you're under audit, facing criminal charges for unfiled returns, or already dealing with the state in similar ways, you cannot use this program. However, it's better to be safe than sorry – if you're unsure whether or not you qualify, reach out to a tax professional for guidance today.

How to apply for a voluntary disclosure in Utah

To apply, file Form TC-43 (Voluntary Disclosure Application) and then email it to [email protected]. The program is most commonly used for sales taxes, but you may also qualify if you have unpaid withholding tax or other business taxes. 

You may apply anonymously. In this case, you should limit the identifying information on the return. The state's website doesn't give any guidance on how to anonymize your email address when you send in the application – so you may want to consult with a tax pro if you prefer to apply anonymously. If you do so, you will reveal your business's identity when you sign the agreement. 

What happens after you apply for a Voluntary Disclosure in Utah?

The state will review your application, and if they issue initial approval, they will send you a Voluntary Disclosure Agreement (VDA). You have 90 days to review and sign that. Then, you have an additional 30 days to submit the unfiled returns and any other required documents. Once the Commission receives that info, they'll formally assess the tax, and then, you have 30 days to pay. 

How many years of returns do you need to file?

The number of years of returns you need to file will be one of the following:

• Three years unless one of the other conditions applies. 
• The amount of time you've had nexus in Utah, if less than three years – for example, if your online business just passed the sales threshold for economic nexus two years ago, you'll need to file two years of returns. 
• The amount of time you've been collecting taxes from others and not remitting them to the state, if longer than three years – for example, if you've been collecting Utah sales tax from customers for four years, you'll need to file four years of returns.

The Tax Commission will let you know how many years you need to file after they review your initial application. 

Can you set up payments on the amount owed?

Unfortunately, no. The state does not allow Voluntary Disclosure Program applicants to set up payments on their Utah taxes. 

What if I cannot afford to pay in full?

If you cannot afford to make the payment within 30 days, you will lose your penalty waivers, and the state will apply the failure to file and failure to pay penalties to your account. However, at that point, you may qualify to apply for a payment plan, and if you're insolvent, you may even be able to get a Utah offer in compromise.

How do I contact the VDP in Utah?

In addition to the email address listed above ([email protected]), you can contact the state by mail, phone, or fax:

Special Services Division
Utah State Tax Commission
210 North 1950 West
Salt Lake City, UT 84134
Phone: 801-297-6299
Fax: 801-297-6358

What if I owe sales tax in multiple states?

Then, you may want to use the Multistate Tax Commission’s National Nexus Program. This program is primarily for businesses that haven't been collecting or filing sales tax returns in multiple states, including Utah. You can contact them at:

Director, National Nexus Program
Multistate Tax Commission
444 North Capitol Street, NW, Suite 425
Washington, DC 20001-1538
Phone: 202-695-8140
E-mail: [email protected]
Website: mtc.gov

Does the IRS offer a Voluntary Disclosure Program?

Yes, the IRS offers a Voluntary Disclosure Program (VDP), but it's typically for people who may have committed criminal tax charges. If you believe that you need help with that program, you can use TaxCure to search for a pro and narrow down the results to see someone with VDP experience or tax crime experience. The IRS also offers different types of disclosure options for people with unreported foreign income or assets. 

Get Help With Unfiled Utah Taxes

Whether you're a few months late or a decade behind, a Utah tax pro can help you get back into compliance. To learn more, use TaxCure to search for a pro. Then, review their profile and reviews, set up a consultation, and get back your peace of mind. Don't wait – find help today. 

It's critical to reach out as soon as possible – again, you generally cannot qualify for these programs once the state contacts you about the unfiled returns. You can save a significant amount on penalties and avoid criminal repercussions if you qualify for this program.