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The Kentucky Voluntary Disclosure Program (VDP) is designed to promote compliance and to benefit taxpayers who discover a past filing obligation and liability that has not been discharged. It applies to taxpayers that have failed to file returns and pay any taxes due to the Kentucky Department of Revenue (DOR). It applies to any tax administered by the Department and to any type of domestic or foreign taxpayer that is subject to tax in this State.

VDP does not apply to a taxpayer that files a return but underreports the tax due on the return.

Voluntary disclosure arises when a taxpayer contacts DOR prior to initial contact by this agency concerning the filing of a return and the payment of a tax. Voluntary disclosure requests from taxpayers that feel they have a filing obligation and liability in multiple states may be submitted to the Multistate Tax Commission by following the link:

A major component of the VDP is to resolve sales and use, and corporate income and franchise tax liabilities when nexus is the central issue.

Qualifying for Voluntary Disclosure

To qualify for the Voluntary Disclosure Program, a taxpayer must meet all of the following criteria:

  • The taxpayer has not been contacted by the Department of Revenue or Multistate Tax Commission with respect to any tax for which the taxpayer is requesting voluntary disclosure.
  • The taxpayer does not have outstanding tax liabilities other than those reported through the voluntary disclosure.
  • The taxpayer is not under audit for any tax.
  • The taxpayer pays the tax due plus accrued interest within 60 days from the date of acceptance by DOR of the voluntary disclosure agreement.
  • Upon request, the taxpayer makes records available for audit to verify the amount of the taxpayer’s liability and the accuracy of the representations made by the taxpayer.

Benefits of Voluntary Disclosure

A taxpayer whose application for a voluntary disclosure is approved will receive:

  • A requirement to file returns and pay tax will be limited to four years for taxes filed annually or forty-eight months for taxes that do not have an annual filing frequency. If the applicant has collected taxes from others, such as sales and use taxes or withholding taxes and not reported those taxes for periods beyond four years or forty-eight months, the requirement to file and pay may be extended to cover those periods.
  • The requirement to file returns and pay taxes for taxpayers discovered through examination that are not registered or non-filers is eight years for taxes filed annually or ninety-six months for taxes that do not have an annual filing frequency. Under the VDP, the requirement to file returns and pay taxes for four years or forty-eight months refers to returns that are currently past due. To determine the filing requirement for voluntary disclosure for taxes that are filed annually, a taxpayer would file the most recent return that is past due, plus returns for the three (3) previous years. To determine the filing requirement for taxes that do not have an annual filing frequency, a taxpayer would file the most recent return that is past due, plus returns for the previous forty-seven (47) months.
  • Waiver of penalties.
  • When applicable, the ability to report the applicable tax liability in a spreadsheet format versus filing a return for each period involved.
  • Sixty (60) days from the Voluntary Disclosure Agreement date to determine the liability, and prepare the returns or spreadsheets and pay the amount of tax and interest due.

Voluntary Disclosure Process

The taxpayer contacts the Department of Revenue to offer voluntary disclosure and registration.

The taxpayer submits the following information in writing:

  • For a business - a brief description of the taxpayer's operation, the number of years the business has been operating, and the nature and extent of business operations in Kentucky. This description must include whether the business owns or leases property, has employees, or has other potential taxable activities in Kentucky.
  • For an individual - the appropriate number of years the taxpayer was required to pay tax in Kentucky.  A distinction between resident and non-resident years must be made.
  • Whether or not the taxpayer receives payments for goods or services provided to the Commonwealth of Kentucky or the federal government.
  • Whether or not the Department of Revenue has contacted the taxpayer. If so, the nature of the contact(s).
  • The disclosure terms proposed by the taxpayer. Generally the Department of Revenue requires a four-year "look back" for all type taxes.
  • If the tax nexus is so nebulous that the taxpayer believes prospective filing is justified, the Department of Revenue would prefer that the taxpayer simply register and go forward from that point. Under normal circumstances, the Department of Revenue will not be willing to waive any past liability as part of a prospective filing.
  • To preserve confidentiality, the taxpayer's representative is not required to reveal the name of the taxpayer or any other information that could readily identify the taxpayer to the Department of Revenue until the disclosure agreement is finalized. The Department of Revenue will assign an anonymous identifier to the case until the agreement is final.
  • Once the information is received, the Department of Revenue will advise the taxpayer's representative of policies generally found to be acceptable and, together with the representative, formulate an offer that is acceptable.
  • Once the terms of the disclosure are finalized, the Department of Revenue will prepare a disclosure agreement for review and approval by the taxpayer.
  • All information submitted by the taxpayer will be included in a Statement of Representations and Inducements, included in the disclosure agreement, used to determine whether the Department of Revenue will accept the disclosure.
  • If significant misrepresentations are found in this statement, or in any of the other representations made to support the disclosure, the agreement may be considered void and any additional taxes, penalty, and interest will be assessed.
  • The Department of Revenue will forward the disclosure agreement, the Statement of Representations and Inducements, and any necessary registration forms, with a cover letter to the taxpayer's representative. The Department of Revenue will confer with the taxpayer's representative to determine acceptability of terms.
  • Three signature pages will be included within the agreement; a copy for the taxpayer, a copy for the taxpayer's representative, and a copy to be retained by the Department of Revenue, indicating acceptance of the disclosure. Generally the taxpayer has 90 days to comply and execute the disclosure.
  • The Department of Revenue will register the taxpayer at the time the signed agreement is received. The taxpayer has 90 days from the completion of the executed agreement to file returns or adequate schedules and submit payment of the tax. Interest will be assessed from the original due date of the return until the date the tax is paid in full. If additional information is needed, the Department of Revenue will contact either the taxpayer or the taxpayer's representative.

Inquire about Voluntary Disclosure by calling (502) 564-4921, ext. 4409 or by writing to:

Kentucky Department of Revenue
Division of Collections
Legal Support Branch
P.O. Box 5222
Frankfort, KY 40602

Please include your representative's name and a telephone number where your representative can be reached between 8:00 a.m. - 4:30 p.m. EST.

Audits for Voluntary Disclosure Period

DOR reserves its right to audit a taxpayer's books and records, subject to the time limits per KRS 141.210​. The audit may include all or part of a voluntary disclosure period.

DOR will assess any tax determined to be due that was not discharged under the Voluntary Disclosure Agreement. All applicable penalties and interest will apply to additional taxes discovered to be due that have not been paid.

A taxpayer contacted by the DOR for the purpose of examination after an application for voluntary disclosure has been submitted, but prior to acceptance of the agreement by DOR, may disclose same to suspend audit activity pending acceptance into the VDP.


The Department will not release the identity of a taxpayer that enters into a Voluntary Disclosure Agreement or the terms of the agreement unless the information must be released upon request under the provisions of KRS 61.878​ or existing information exchange agreements.​

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The Kentucky Department of Revenue conducts work
under the authority of the Finance and Administration Cabinet.

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