Tax audits, their types, Cameral tax audit - Taxes and taxation

Tax audits, their types

But the main form of control of tax authorities is still a tax audit. The tax legislation established three types of inspections conducted by tax authorities: office, exit, as well as verification of transactions between interchangeable persons. Both types of tax audit have one goal - to monitor compliance with tax and fee legislation by taxpayers, tax agents and payers of fees. However, in the methods and forms of their implementation, there are significant differences.

Tax inspections are conducted at the location of the tax authority on the basis of tax returns, calculations and documents submitted by the taxpayer, tax agent or payer of fees, as well as other documents available to the tax authority. This type of audit can be conducted against any taxpayer, tax agent or payer of fees, whether it be a legal entity or an individual.

In contrast,

field tax audits must be conducted in the territory or in the premises of a taxpayer, tax agent or payer of fees and only if these persons do not have the opportunity to provide premises for an on-site inspection, it can be conducted at the location of the tax authority.

Offsite tax audits can only be conducted in relation to organizations and individual entrepreneurs. Thus, an on-site inspection can not be carried out with respect to a taxpayer - an individual, unless he is engaged in entrepreneurial activity.

A special type of tax audit is control in connection with the transactions between interdependent persons.

Cameral tax audit

Cameral check is carried out by authorized officials of tax authorities in accordance with their official duties and does not require any special decision of the head of the tax authority. It can be held within three months from the date a taxpayer, tax agent, or payer submits a tax return or payment.

In case of detection of errors in the tax return and calculation or contradictions between the information contained in the submitted documents, the tax authority should inform the taxpayer, the tax agent or the payer of the fees. This communication should contain a requirement to provide necessary explanations within five days or make appropriate corrections in the period established by the tax authority.

The official of the tax authority conducting the desk audit is required to review the explanations provided, as well as other documents additionally submitted by the taxpayer, tax agent or payer of fees. If, after reviewing the explanations and documents presented, as well as in the absence of explanations, the facts of concealment or understatement of the taxable base, as well as the amounts due to taxes, are revealed, then the tax authority official must draw up an audit certificate identical to the certificate drawn up at the on-site tax audit.

When conducting a desk audit, tax authorities have no right to demand from the taxpayer additional information and documents not provided for by the US Tax Code. In particular, taxpayers and payers of levies using tax incentives during the desk audit are required to present at the request of the tax authority documents proving their right to these tax benefits. The tax authority is also entitled to demand from the inspected persons additional documents confirming the legitimacy of reimbursement of VAT and tax deductions made under this tax. When conducting a desk audit on taxes related to the use of natural resources, the tax authorities have the right to request from the taxpayer additional documents that are the basis for calculating and paying these taxes.

The list of additional materials or information requested during the desk audit was slightly extended. In particular, when conducting a desk-based tax audit on the basis of an updated tax return, in which the amount of tax payable to the budget is reduced in comparison with the previously submitted tax return, or the amount of the loss received in the relevant reporting or tax period is declared, the tax authorities have the right to demand the taxpayer must submit within five days the necessary explanations justifying the change in the declaration indicators or the amount of the loss received.

In some cases, tax authorities have the right to demand from the taxpayer invoices, primary and other documents. This can be the case, in particular, if there is a contradiction in the submitted tax declaration for the value-added tax, or inconsistency of information on transactions in this tax declaration, information on these transactions in the declaration for this tax, the register of received and invoiced invoices submitted other taxpayers. But the tax authorities have the right to request this information only when such contradictions or inconsistencies testify to understatement of the amount of value added tax payable to the budget or to overstate the amount of this tax claimed for reimbursement.

When carrying out a desk tax audit of a tax return on corporate income tax and on income tax for individuals who are parties to an investment partnership agreement, the tax authority has the right to demand from them information about the period of their participation in such a contract, costs or losses of an investment partnership.

The question arises about the possible actions of tax officials in the event that the taxpayer submitted an updated tax return or settlement before the end of the desk tax audit. In this case, the conducted cameral tax audit should be terminated and a new desk audit should begin on the basis of an updated tax return or calculation. At the same time, the tax authority has the right to use documents and information received during the termination of a desk audit.

The cameral tax audit of the consolidated group of taxpayers is subject to general rules for conducting it, taking into account certain features. It is carried out on the basis of tax returns, calculations and documents submitted by the responsible participant of this group, as well as on the basis of other documents available to the tax body on the activities of this group. When conducting a desk tax audit, the tax authority has the right to demand from the responsible participant of this group copies of documents related to the activities of other participants in the group under test.

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