Tax Offenses & Penalties for Non-Compliance: A Guide
Tax Offenses and Penalties for Non-Compliance
Accounting Requirements
Taxpayers and businesses of all sizes must adhere to specific accounting requirements. The tax law establishes penalties for non-compliance, including fines and imprisonment, categorized as “Violations and Tax Crimes.” Examples of accounting-related offenses include:
- Malicious omission of purchased, sold, or exchanged goods in accounting records.
- Falsification of balances or inventories.
- Reuse of invoices, debit notes, or credit notes from previous transactions (penalty: fine and imprisonment).
- Failure to present required accounting books or documents to the IRS (penalty: fines).
- Obstructing IRS control or review processes (penalty: fines).
- Not maintaining required accounting books or keeping them improperly (penalty: fine).
- Loss or mutilation of accounting books or documents, unless deemed accidental by the SII (penalty: fine).
What to do in case of unintentional loss or mutilation of books?
- Notify the IRS within 10 days.
- Reconstruct the accounts within 30 days, adhering to IRS standards.
Accountants who prepare false or malicious statements or balance sheets face fines and imprisonment, with the severity depending on the facts. Professional sanctions may also be imposed by the Institute of Chartered Accountants. Accountants can be excused if they prove they acted based on data provided by the taxpayer.
Proof of Tax Compliance
Tax returns and information provided to the IRS are generally accepted as truthful. However, if discrepancies arise, the taxpayer must provide proof. The Tax Code states that the IRS cannot disregard taxpayer-provided statements and facts unless they are deemed unreliable. Proof must be provided through legally admissible documents, books, or other means.
Can the IRS call witnesses?
Yes, in specific cases allowed by law, such as Article 34 of the CT, which compels taxpayers, signatories, technicians, and consultants involved in tax return preparation to testify under oath. For companies, members or administrators are also obligated to appear before the Regional Directorate.
Tax Declaration and Payment
Mode of Filing:
- Tax returns must be submitted in writing and under oath to IRS offices or other designated locations.
- Taxpayers must meet IRS-specified requirements, such as using IRS forms, although their absence doesn’t exempt taxpayers from filing.
- The IRS may allow electronic submission methods.
- Returns must be filed within statutory deadlines, which the Regional Director may extend for valid reasons.
- Deadlines falling on holidays, Saturdays, or December 31st are extended to the next business day.
- Required documents and records must accompany tax returns.
Requirements for Taxpayers Keeping Accounts:
Taxpayers keeping accounts must submit balance sheets, a copy of the inventory signed by an accountant, and potentially other documents like ledgers and profit and loss statements. The IRS may also require documentation proving declared income.
If taxpayers fail to file, the IRS can determine the tax owed based on available information. A settlement will be issued, including unreported items, taxes owed, and late fees.
Penalty for Failure or Delay in Filing:
Failure or delay in filing is a tax violation, punishable by a fine ranging from one monthly to one annual tax unit. For statements directly used for tax determination, the penalty can reach 30% of the tax due.
Other Sanctioned Cases:
Incomplete or misleading statements, omission of documents, or incomplete presentations are also considered violations and subject to fines. Maliciously incomplete or false declarations are considered crimes, punishable by fines and imprisonment.
Payment of Tax:
- Taxes can be paid at the Treasury, authorized banks, and other designated entities.
- Payment methods include cash, promissory notes, bank drafts, or checks. Credit card payments may be authorized if they don’t incur additional costs for the Treasury.
- When paying by check, specify the tax, period, role number, and taxpayer name. Checks should be nominative and crossed for deposit into the Treasury’s account.
The Treasury cannot refuse partial tax payments for multiple periods but must record this on the receipt.
Penalty for Late Payment:
Late tax payments are adjusted according to the CPI, except for payments made within the same calendar month as the due date. A penal interest of 1.5% per month is applied to adjusted values.
Obligation to Provide Invoices
The following must issue invoices for all transfers, regardless of the buyer’s status:
- Industrialists, farmers, and other vendors specified by the VAT Law.
- Importers, distributors, and wholesalers.
These taxpayers can issue tickets instead of invoices for direct sales to consumers in designated establishments or departments.
Requirements for Issuing Invoices and Tickets:
- The IRS determines the minimum amount for issuing invoices and tickets.
- Invoices/tickets must be issued at the time of contract conclusion or income receipt.
- Purchasers are obligated to request and obtain invoices or tickets.
Exemptions from Issuing Invoices:
The Regional Bureau may exempt street vendors and small businesses selling essential items from issuing invoices for a specific period. They may also be exempted from maintaining a Daily Sales Paper.
Crimes Related to Invoices and Tickets:
- Failure to provide invoices, debit/credit notes, or slips when required.
- Unauthorized use of documents without proper stamps.
- Splitting sales amounts to avoid providing invoices.
Penalties include fines of up to 40 UTA and closure of the offending establishment. Repeated violations within three years can lead to imprisonment or banishment.
Failure to request and obtain an invoice or ticket is also punishable by a fine.