Paying taxes is a legal obligation for all taxpayers. However, it is important to know that the tax authorities can check taxpayers’ tax returns for compliance. In this article, we’ll take a look at how tax returns are checked by the tax authorities, from the elements known in the taxpayer’s file to the various stages of the check in the event of inconsistency. We will also look at how the taxpayer can respond to requests from the tax authorities to clarify any errors and avoid an in-depth examination of his situation.
First inspection of tax returns
The first audit conducted by the tax authority involves verifying that the taxpayer has filed the various tax returns on time and that they do not contain any errors, omissions, inaccuracies, or concealments. This audit is conducted from the tax authority’s office based on the information available in the taxpayer’s file. This audit authority, known as a “documentary audit,” is based on Article L10 of the Book of Tax Procedures, which authorizes the tax authorities to review tax returns and documents used to assess taxes and to request from taxpayers any information, supporting documentation, or clarifications regarding the filed returns.
Tax authorities’ requests for information and justification
In the event of an inconsistency, the tax authorities may send a simple request for information to the taxpayer or, for the assessment of income tax, in the cases provided for in Article L. 16 of the Book of Tax Procedures, a request for clarification or supporting documentation. A simple request for information does not, in and of itself, impose an obligation to respond or result in an ex officio assessment. For a formal request under Articles L. 16 and L. 16 A, the response period may not be less than two months. If the response to this formal request is insufficient, the tax authority will issue a formal notice requiring the taxpayer to supplement it within thirty days, specifying the additional information required. Failure to respond to the formal request or, following a formal notice, a response that is tantamount to a failure to respond may result in an assessment by the tax authority under the conditions set forth in Article L. 69, and not solely due to a lack of response to an ordinary request for information (Book of Tax Procedures, Articles L. 16, L. 16 A, and L. 69).
The different stages of a tax audit
Depending on the taxpayer’s response, the tax authorities may decide that the taxpayer’s situation is compliant and take no further action, rectify the shortcomings identified by sending a rectification proposal, or carry out a more in-depth audit, after informing the taxpayer in advance.
Checking tax returns can be a source of stress for taxpayers. To avoid any inconvenience, it is important to respond to requests from the tax authorities and to clarify any errors. Altertax tax lawyers are on hand to advise you on the tax benefits of these schemes and help you respond to requests from the tax authorities. Please do not hesitate to contact us.