Navigating Multi-State VDAs: Why Accounting Firms Should Outsource

In today's increasingly interconnected economy, businesses frequently find themselves with sales tax obligations across multiple states—often without realizing it until exposure becomes significant. Voluntary Disclosure Agreements (VDAs) offer a powerful way to address past non-compliance proactively. A VDA is a contractual agreement between a taxpayer and a state tax authority, allowing a business to voluntarily disclose and pay previously unreported or underreported sales and use taxes. In return, states typically offer substantial concessions, such as limiting the look-back period (often to 3–4 years instead of indefinite or 5–7+ years), waiving penalties (and sometimes interest), and avoiding aggressive audits.

For businesses with multi-state operations—especially e-commerce, SaaS, or those impacted by post-Wayfair economic nexus rules—coordinating VDAs across numerous jurisdictions can become a complex, time-intensive endeavor. This is where accounting firms play a critical role in advising clients. However, handling multi-state VDAs in-house presents unique challenges that can strain resources and expose firms to risks. Outsourcing these specialized tasks to dedicated sales tax experts often proves to be the smarter, more efficient path.

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The Growing Complexity of Multi-State VDAs

Sales tax compliance has grown dramatically more intricate since the 2018 South Dakota v. Wayfair decision, which expanded economic nexus thresholds. States now aggressively pursue remote sellers, and each jurisdiction maintains its own rules:

• Differing eligibility requirements — Some states require no prior contact from the tax authority, while others have specific thresholds for liability amounts or business activities.

• Variable look-back periods and relief — Penalty waivers, interest abatement, and disclosure timelines vary widely (e.g., 3 years in some states, longer where taxes were collected but not remitted).

• Application processes — Some allow anonymity through representatives, while other states demand immediate identity disclosure.

• Documentation and negotiations — Preparing detailed exposure calculations, transaction histories, registration filings, payment coordination, and ongoing state communications requires precision to avoid disqualification or unfavorable terms.

Managing these variations for even a handful of states demands deep, current expertise in dozens of jurisdictions—something most general accounting firms lack without dedicated sales tax specialists.

Challenges of Handling Multi-State VDAs In-House

Accounting firms that attempt to manage multi-state VDAs internally often encounter significant hurdles:

1. Specialized Knowledge Gaps — Sales tax rules change frequently, and VDAs involve nuanced interpretations of nexus, taxability of products/services, and state-specific concessions. General tax professionals may miss critical details, leading to suboptimal agreements or rejected applications.

2. Resource Strain and Capacity Issues — VDAs require extensive data gathering, exposure modeling, form preparation, negotiations, and follow-up—often spanning 2–6 months per state. During busy seasons, this diverts time from core services like audits, financial reporting, and advisory work.

3. Risk of Errors and Non-Compliance — Missteps in calculations or submissions can result in lost penalty relief, extended look-back periods, or even triggering audits. For firms handling multiple clients, the cumulative risk grows quickly.

4. Scalability Limitations —Managing a single VDA is not very challenging, but handling multiple VDAs simultaneously can be difficult. This complexity arises from the need to develop new workflows, manage client data, signatures, and registrations, and track the numerous deadlines associated with each part of the VDA for each state.

These issues can erode firm profitability, delay client deliverables, and diminish service quality.

Why Outsourcing Multi-State VDAs Makes Sense for Accounting Firms

Partnering with a specialized provider for VDA services allows accounting firms to deliver high-value, compliant outcomes without building an entire sales tax department. Key advantages include:

• Access to Deep Expertise — Specialists stay current on state policies, VDA programs, and best practices, ensuring optimal terms (e.g., maximum penalty waivers and minimized look-back exposure).

• Anonymity and Efficiency — Many VDAs allow anonymous applications through a representative, preserving client confidentiality until terms are favorable. Experts handle the full process—from nexus analysis and application submission to negotiations, registrations, and closure.

• Cost-Effectiveness and Scalability — Outsourcing converts fixed costs (salaries, training, software) into variable fees, often more affordable than in-house expansion. Firms can scale support for one state or dozens without internal bandwidth constraints.

• Risk Mitigation — Experienced providers reduce errors, ensure deadlines are met, and coordinate multi-state filings seamlessly—freeing accountants to focus on higher-level advisory relationships.

• Enhanced Client Service — Firms can offer comprehensive solutions, including nexus studies, voluntary disclosures, registrations, and ongoing compliance, positioning themselves as full-service partners in an increasingly complex tax landscape.

For example, a client discovering multi-state exposure can receive a thorough nexus review, detailed exposure estimates, and managed VDAs across relevant jurisdictions—all coordinated through their trusted accounting firm but executed by specialists.

Partnering with the Right Provider

When selecting an outsourcing partner for multi-state VDAs, look for firms with proven experience in sales tax voluntary disclosures, transparent pricing, and a client-focused approach. Affordable, expert-led services ensure businesses resolve exposure efficiently while firms maintain strong client relationships without operational strain.

In an era where sales tax non-compliance risks continue to rise, outsourcing multi-state VDA work empowers accounting firms to provide proactive, strategic guidance—turning potential liabilities into opportunities for compliance and growth.

At Cassone Consulting, we specialize in affordable, expert-led Voluntary Disclosure services, nexus studies, and sales tax compliance support. Our streamlined process helps businesses—and the accounting firms that serve them—navigate these complexities with confidence. Contact us today to learn how we can support your clients' multi-state needs.

Cassone Consulting LLC – Affordable Sales Tax & Voluntary Disclosure Specialists