Filing a current year return doesn’t cure prior-year tax liabilities. While it’s tempting to simply start filing in a state upon becoming aware of a filing obligation, this approach won’t make the issue disappear because a statute of limitations doesn’t start until you file a return for the tax year. In addition, taxpayers often submit registrations under penalties of perjury, so they must accurately disclose on the registrations when they began doing business.
Therefore, filing a current year return without addressing historic tax liabilities ignores rather than addresses the historic tax exposures.
Instead, a taxpayer should consider the benefits of entering into Voluntary Disclosure Agreements (VDA) with one or more states and localities to address its historic state and local tax liabilities.