The Russian tax inspectorate has been extremely creative and thorough in identifying and collecting unpaid taxes in recent years. Today, the process governing the collection of funds from individuals and legal entities has become much more complex and sophisticated
Dmitry Kudryavtsev, attorney-at-law and managing partner of CTL Law Office, spoke specifically for RuNews24.ru about modern methods and practices of tax administration that stump even experienced taxpayers.
Traditionally, the tax inspectorate checked mostly obvious corners: identifying cars, real estate and other large assets for which the appropriate taxes should be paid. However, these methods were not enough to cover all possible tax flows.
“One of the key areas has become the use of modern technology and data. The FTS is actively implementing modern IT platforms that allow emphasizing hidden traces of assets and transactions. Automated audit systems based on big data and machine learning analyze information from all available sources.”
Such sources are:
- Banking transactions;
- Cryptocurrency transactions;
- Social media and digital footprints;
- Contracts and corporate transactions;
“Today, the IRS is actively using information available on social media. For example, photos from luxury resorts or expensive purchases can be grounds for additional audits. This approach helps to identify discrepancies between declared income and the lifestyle of taxpayers.”
Cryptocurrencies have become a new challenge for tax authorities. However, despite their anonymous nature, tax authorities have learned how to track the movement of digital funds. Collaborative international efforts and information sharing between countries are helping to remove barriers to tracking cryptoassets.
Tax authorities have increased scrutiny of foreign accounts and assets. Thanks to international agreements and automatic exchange of tax information, the inspectorate has access to data on overseas financial transactions.
A person receives regular remittances with similar amounts on similar dates. From the point of view of the Federal Tax Service, this is similar to payments from the rental of property or payment for labor duties performed.
Further, an audit can be conducted on a wide range of issues. For example, a person owns several apartments, which significantly increases the likelihood that he or she is renting them out. If any signs are detected, the tax office can involve witnesses, neighbors, the MC (who sometimes complain about the fact that someone is renting out an apartment) and so on.
In general, tax authorities have started to collect information on the Internet much more. For example, there are real cases where the FTS examined information about an individual entrepreneur who paid very modest taxes, indicating that he worked alone or with two or three employees. However, the website of this sole proprietorship (beauty salon) indicated the presence of specialists of various profiles, posted a photo of a large friendly team, and other resources found reviews of specific masters working in this salon, indicating the prices and services provided by them.
It turns out that all of these “employees” worked without a contract and received remuneration without paying the relevant taxes. As a result, the Federal Tax Service conducted a comprehensive audit and assessed additional taxes, including fines and penalties. Such cases are found in courts and have become not very rare.
There are even more interesting ways of proving. A company has won a government contract to provide certain services. According to the provisions of the contract, a certain number of employees are required to fulfill the contract, but the company paid FTP to a significantly smaller number of people. The Federal Tax Service identified this situation, held everyone liable and assessed taxes.
It is not uncommon for companies that are not formally related to each other, operating under special regimes, to be linked in various ways. These include administration of a website by one company for another, common registers and databases, overlap in terms of employees and material resources, common telephone numbers and e-mail addresses, etc. Thus, the FTS proves the fact of splitting the business in order to optimize the tax burden, which is not in accordance with the law.
In short, the Federal Tax Service is massively engaged in controlling and analyzing information on public resources, on the Internet and more and more carefully controls bank transfers. If you, as an individual, receive some receipts from other persons on your card (of course, it is usually about relatively large sums), you should be ready to explain from whom and why this receipt. It can be a gift from a relative, debt repayment, etc. (no tax), and if it is a payment for goods sold or a receipt from an employer, there will be tax to pay.
In today's world, taxpayers must be especially careful and responsible when it comes to paying taxes. More and more sophisticated methods of tax authorities are aimed at ensuring the completeness and timeliness of tax obligations. As Dmitry Kudryavtsev notes, understanding current methods and trends in tax administration helps avoid unpleasant surprises and sanctions.
The main point is that you can't think that everything that is on the internet is unknown to the IRS. Everything you make public is public in every sense.