Out-of-State Voluntary Disclosure Program


The California Department of Tax and Fee Administration (CDTFA) encourages businesses to voluntarily register and pay use tax obligations due to the State of California. The Voluntary Disclosure Program provides incentives for unregistered out-of-state companies to satisfy their use tax obligations.

Benefits from the Voluntary Disclosure Program

Revenue and Taxation Code section 6487.05 governs voluntary disclosures in California. Out-of-state retailers who are engaged in business in California are required to collect use tax on sales of taxable merchandise to consumers in California. Section 6487.05 was adopted to encourage out-of-state retailers who have failed to collect and pay this tax to voluntarily come forward and register. Some of the benefits of this program are:

  • Limits the time the CDTFA can assess overdue use tax to three years. Without this section, the applicable statutory period would be eight years.
  • Allows the CDTFA to waive late filing or late payment penalties.
  • Applicants may obtain a written opinion as to whether the CDTFA would approve a voluntary disclosure request based on circumstances presented anonymously.

Who is Liable for California Use Taxes?

Persons who are "engaged in business" in California (as defined by Revenue and Taxation Code section 6203) are responsible for collecting and remitting the sales or use taxes on all sales of tangible personal property (merchandise) (unless the transaction is otherwise exempt). Circumstances where a retailer is considered to be engaged in business in California, commonly referred to as "nexus," for sales and use tax purposes include (but are not limited to) the following:

  • Maintaining, occupying or using any type of office, sales room, warehouse or other place of business in California. This includes use that is temporary, indirect or through an agent or other representative.
  • Having any kind of representative operating in the state for the purpose of taking orders, making sales or deliveries, installing, or assembling tangible personal property.
  • Deriving rentals from a lease of tangible personal property located in California.

Who Qualifies for the Voluntary Disclosure Program?

To qualify for the Voluntarily Disclosure Program, you must meet the following five conditions:

  • Be located outside California and cannot have been previously registered with the CDTFA;
  • Be engaged in business in California as defined by section 6203;
  • Register voluntarily with the CDTFA;
  • Have not been previously contacted by the CDTFA or its agents regarding its activities in California; and
  • Failure to pay the tax or file a return was due to reasonable cause and not as a result of negligence, intentional disregard of the law, or by an intent to evade taxes.

Who Does Not Qualify for the Voluntary Disclosure Program?

The voluntary disclosure program is not applicable to cases involving:

  • Any purchases subject to the California use tax.
  • Sales by persons, registered or unregistered, which are subject to California sales tax.
  • Any person holding or who held a seller's permit.

To request an opinion as to whether or not the CDTFA would approve a voluntary disclosure request or to discuss your eligibility for consideration under the Voluntary Disclosure Program, please contact the Voluntary Disclosure Specialist at the following address:

California Department of Tax and Fee Administration
Voluntary Disclosure Program
PO Box 942879 (MIC: 44)
Sacramento, CA 94279-0044
1-916-322-0187 (fax)
Voluntary Disclosure (e-mail)

To receive the most accurate response possible to your request, please include the following:

  • A description of how you meet the qualifications listed above.
  • A description of your business activities, including how products are marketed and sold to California customers.
  • A detailed description of the flow of goods to the customer from the time an order is placed.

How to Apply

  • Register on the CDTFA homepage by selecting Register located on the upper right hand corner. Select Register a New Business Activity or Location (listed under the Registration section) or register in person at any of our office locations
  • Complete form CDTFA-38, Application for Out-of-State Voluntary Disclosure, within thirty (30) days of registration and submit it to the following address:

    California Department of Tax and Fee Administration
    Out-of-State Office
    3321 Power Inn Road, Suite 130
    Sacramento, CA 95826-3893

After your application has been processed you will receive either an acceptance letter or a denial letter. If you receive a denial letter, it notifies you in writing that you do not meet the requirements for the voluntary disclosure program.

If you receive an acceptance letter, you will be asked to electronically file your tax return(s). You may file and pay your tax return online by accessing online services either by using your Limited Access Code or by using your Username and Password. A Limited Access Code is assigned to you when your registration is approved. For access to full online services account features, such as making changes to your account or filing a return online, you are required to create a Username and Password.

To register for a Username and Password, go to our website and click on Login, scroll down and click View Accounts. You will be directed to the CDTFA Online Services webpage. Create a Username and Password by clicking on Sign Up Now (listed under Create a Username). During the Username and Password registration, you will be prompted to request a security code. The security code will be mailed to you at the mailing address on record within seven to ten (7-10) business days. Once you receive your security code you will return to the CDTFA website and complete the steps above to access your account. If you have not received your security code by the time your return or payment is due, you can use your Limited Access Code to file your return and pay the amount due.

Payment may be made online at the time of filing, or a check can be mailed with your account number and period being paid in the memo line. A printable voucher is available for prepayments made by check, using the Limited Access Code Functions.

Relief of Penalty

To seek relief from penalty charges a written request must be made, signed under penalty of perjury, which sets forth the facts why the late filing occurred. Form CDTFA-38, Application for Voluntary Disclosure, contains a section where the applicant may request relief from penalty.

Potential Disqualification for the Franchise Tax Board (FTB) Voluntary Disclosure Program

The CDTFA online registration has an optional field for a Secretary of State (SOS) number during the completion of the online registration. If you intend to apply for the voluntary disclosure program with the FTB, please note that establishing a SOS registration prior to applying for the FTB program will disqualify you from participating in the voluntary disclosure program with the FTB. Please visit FTB's voluntary disclosure program website for more information.

For more information regarding the CDTFA Out-of-State Voluntary Disclosure Program, see publication 178.