Tax evasion: breaking it down

Such violations are defined in Chapter 16 “Types of tax offenses and responsibility for their commission” of the Tax Code of the Russian Federation. The main part of them is located in the table below.

Type of violation	Amount of fine	Grounds (Article Tax Code)
Violation by the taxpayer of the established deadline for filing an application for registration with the tax authority	10,000 rub.	Art. 116
Conducting activities by an organization or individual entrepreneur without registration with the tax authority	10% of income received as a result of such activities, but not less than 40,000 rubles.	Art. 116
Failure to submit a tax return (calculation of insurance premiums) to the tax authority at the place of registration within the deadline established by the legislation on taxes and fees	5% of the amount of tax (insurance premiums) not paid within the deadline established by the legislation on taxes and fees, subject to payment (additional payment) on the basis of this declaration (calculation of insurance premiums), for each full or partial month from the day established for its submission, but no more than 30% of the specified amount and no less than 1,000 rubles.	Art. 119
Failure of the managing partner responsible for maintaining tax records to submit a calculation of the financial result of the investment partnership to the tax authority at the place of registration within the period established by the legislation on taxes and fees	1,000 rub. for each full or partial month from the day established for its submission	Art. 119
Failure to comply with the procedure for submitting a tax return (calculation) in electronic form	200 rub.	Art. 119.1
Gross violation of the rules for accounting for income and (or) expenses and (or) taxable items	10,000 rub. (if these acts were committed during one tax period); 30,000 rub. (if these acts were committed during more than one tax period); 20% of the amount of unpaid tax (contribution), but not less than 40,000 rubles. (if these actions resulted in an understatement of the tax base)	Art. 120
Non-payment or incomplete payment of tax amounts (fees, insurance premiums) as a result of understatement of the tax base (base for calculating insurance premiums), other incorrect calculation of taxes (fees, insurance premiums) or other illegal actions (inaction)	20% of the unpaid amount of tax (fee, contribution); 40% of the unpaid amount of tax (fee, contribution) (if these acts were committed intentionally)	Art. 122
Unlawful failure to withhold and (or) transfer (incomplete withholding and (or) transfer) within the established period of tax amounts subject to withholding and transfer by the tax agent	20% of the amount subject to withholding and (or) transfer	Art. 123
Failure to comply with the procedure for possession, use and (or) disposal of property that has been seized or in respect of which the tax authority has taken interim measures in the form of a pledge	30,000 rub.	Art. 125
Failure to submit documents and (or) other information to the tax authorities within the prescribed period	200 rub. for each document not submitted	Art. 126
Failure to submit information about the taxpayer (payer of insurance premiums) to the tax authority within the prescribed period, refusal of a person to submit documents in his possession with information about the taxpayer (payer of insurance premiums) at the request of the tax authority, or submission of documents with deliberately false information	10,000 rub.	Art. 126
Submission by a tax agent to the tax authority of documents containing false information	500 rub. for each submitted document containing false information	Art. 126.1
Failure to appear or evasion of appearance without good reason of a person called as a witness in a tax offense case	1,000 rub.	Art. 128
Unlawful refusal of a witness to testify, as well as giving knowingly false testimony	3,000 rub.	Art. 128
Unlawful failure to report (untimely reporting) by a person of information that this person must report to the tax authority, including failure to submit (untimely submission) by a person to the tax authority of explanations in the event of failure to submit an updated tax return within the prescribed period	5,000 rub.; 20,000 rub. (same acts committed repeatedly within a calendar year)	Art. 129.1

It is worth noting that previously, in case of failure to notify the tax office about opening (closing) a bank account within 7 working days, there was a fine of 5,000 rubles. At the moment, this fine has been abolished (Federal Law dated April 2, 2014 No. 52-FZ).

Tax fines are always administrative liability for offenses that are in one way or another related to improperly fulfilled tax payment obligations. At the same time, the subjects of the offense, that is, persons brought to administrative responsibility, can be both citizens and legal entities.

Criminal offenses

You should know that the very concept of “tax fines” has nothing to do with the Criminal Code. Therefore, classifying “fines” as criminal liability is a gross mistake and complete ignorance of the basics of jurisprudence.

A number of articles of the Criminal Code provide for liability for tax crimes, namely Art. 198–199.4 of the Criminal Code of the Russian Federation. The disposition of these articles differentiates the punishment depending on the severity of the crime committed or depending on the personality of the defendant. Among these punishments there are fines, imprisonment, and correctional labor, and regardless of the type of punishment, it will still be a criminal punishment.

Another significant differentiating feature is that the subject of the crime is always only an individual. This means that only a citizen can be held criminally liable, but not, for example, a business entity.

Thus, only specific persons whose guilt in violating tax laws was direct and whose actions fall under the Criminal Code can be brought in as suspects, accused and defendants. In order to be held criminally liable, two conditions must be met:

• the intentional or negligent nature of the defendant's actions;
• infliction of damage to the state on a large or especially large scale by the accused;
• the accused reaches the age of 16 years.

If at least one of these conditions is not present, criminal prosecution is impossible.

Art. requires a separate explanation. 199 of the Criminal Code of the Russian Federation, since, to the untrained eye, it indicates the possibility of bringing an organization to justice. Not really. An official may be held liable: a manager or a chief accountant (or both) guilty of evading tax obligations.

That is, ultimately, an individual will still be brought to criminal responsibility, and it is he who will be subject to criminal punishment, but not an organization or enterprise.

Tax evasion: breaking it down

It is difficult for an inexperienced person to understand the legal mechanisms that are triggered as a result of tax evasion. But for people in business, especially in “key positions” - the manager and chief accountant, it is important to know what responsibility “shines” for the legal entity-taxpayer, and what responsibility is for them personally, and from whom the damage caused to the state is recovered.

Illegal activities of legal entities in the economic sphere are a multidimensional phenomenon. For example, concealing (understating) proceeds from the sale of goods (works, services) is an illegal act that is located on four levels at once.

a) tax offense (Part 2 of the Tax Code). The sale of goods (works, services), as a rule, brings income to the seller, which results in tax obligations (see table below).

Generally established taxes	Simplified tax procedure
corporate income tax, because income from the sale of goods (works, services) is included in the total income - an element of the taxable base of this tax (- Tax Code)	a single tax payment, since proceeds from the sale of goods (work, services) are included in gross revenue - the object of taxation under the Unified Tax Code (Tax Code)
value added tax, because The sale of goods and other property is recognized as turnover from the sale of goods - subject to VAT (tax) taxation.
mandatory contributions to state trust funds, because net revenue is subject to taxation and a taxable payment database (TC)
excise tax on the sale of excisable goods (NC)

Committing tax offenses entails the application of financial sanctions provided for by tax legislation. In this case, it is a fine in the amount of 20% of the amount of hidden (underestimated) proceeds from the sale of goods (works, services).

Along with this, taxes and other obligatory payments (additional accrual) are charged on the amount of hidden (understated) revenue.

For reference . Concealment (understatement) of proceeds from the sale of goods (works, services) is recognized as:

• non-reflection of the amount of revenue from the sale of goods (work, services) in the registers when documenting the fact of sale of goods (work, services);
• substitution, falsification or destruction of documents indicating the fact of sale of goods (works, services);
• absence in the warehouse or place of sale of goods listed as unsold.

b) administrative offense (CoAO). Deliberate concealment (understatement) of profit (income) constitutes an administrative offense in the following cases:

• if it is committed in an amount that is not significant, i.e. less than 100 ;
• if it is committed for the first time in a significant amount, i.e. in total from 100 to 300.

c) criminal offense (CC). Severe criminal sanctions may apply if:

• within a year after the application of an administrative penalty under the Code of Administrative Offenses, a similar act was committed again, i.e. evasion ranging from 100 to 300;
• deliberate concealment (understatement) of profit (income) was committed on a large scale (from 300 to 500) or an especially large amount (500 and above). In this case, criminal liability occurs without observing administrative prejudice, i.e. regardless of the previously applied administrative penalties to the perpetrators.

Important! A fine as an administrative or criminal penalty and a fine as a financial sanction are not the same thing. The first is collected from officials of the taxpayer organization (according to the Code of Administrative Offenses - up to 15; according to the Criminal Code - up to 600), and the second - from the organization itself (according to Part 2 of the Tax Code - 20% of the amount of hidden revenue). Bringing officials to administrative or criminal liability does not exclude the collection of financial sanctions from the taxpayer-legal entity.

d) civil misconduct (tort) . The nature of taxes as an element of the economic system of the state is public law. At the same time, the nature of the relationship that develops between the taxpayer and the state also has a property component, because Timely and full payment of taxes and other obligatory payments is one of the elements of tax liability.

As a result of causing harm, civil rights and obligations arise. In particular, the victim has the right to demand full compensation for the losses caused to him. But the state is a specific subject of civil legal relations and participates in them through its authorized bodies, in our case – the state tax service.

Another feature is that the tax authorities do not hold persons who caused property damage to the state accountable (in the civil legal sense it simply does not exist). Speaking on behalf of the state, they take measures to restore its violated rights, recovering damages caused.

Conclusion . Illegal activity in the form of deliberate concealment (understatement) of sales proceeds gives rise to two “branches” of consequences:

1) bringing the perpetrators to the legal liability provided for this: a financial sanction is collected from the taxpayer-legal entity, plus its officials face administrative penalties or criminal penalties;

2) recovery of damage caused to the state equal to the amount of taxes and (or) mandatory payments, the payment of which the perpetrators evaded. It can also be collected both from the taxpayer organization itself and from its officials whose illegal actions caused the arrears.

For reference: similar consequences arise when storing unaccounted goods (except for cases of confirmation of their legal origin).

Hence, the application of legal liability measures provided for by law does not cancel the obligation to compensate for the damage caused to the state.

Recovery of damages – when from the guilty management?

The legislation does not contain an exhaustive list of grounds for collecting tax arrears from officials responsible for its creation. According to the author, this is only permissible when the possibilities of recovery directly from the taxpayer - a legal entity - have been exhausted and have not led to results, or the perpetrators intend to voluntarily compensate it personally (more on this below). The following situations can be considered as an example.

a) enforcement proceedings against the taxpayer organization are terminated, and the executive document is returned without execution (Law “On the Execution of Judicial Acts and Acts of Other Bodies”).

b) at the time of applying to the economic court, the taxpayer organization is actually inactive, there are no funds and property at the expense of which the claims can be satisfied.

As a rule, in the process of criminal prosecution of officials, the enterprise ceases to function normally. This is especially true when those in the dock are also its founders (or one of them is the only founder), which also complicates the “change of power” in the organization.

c) a legal entity-taxpayer was created without a real intention to carry out economic activity, but only to cover up the illegal activities of the individuals controlling it.

This applies to a greater extent to various “one-day” companies, cash-cash firms and other participants in illegal financial and economic schemes that formally meet the criteria of an independent business entity.

How is damage caused to the state recovered in such cases?

Compensation – voluntary or forced

Firstly , material damage caused to the state can be compensated by the officials who voluntarily caused it. The legislator stimulates precisely this model of behavior, releasing those responsible from personal administrative and criminal sanctions for this.

Thus, proceedings in a case of an administrative offense under Art. 174 of the Code of Administrative Offenses does not begin, but what has begun is terminated if officials of the business entity voluntarily compensate for the material damage caused within 30 days from the moment of its discovery.

In criminal law this issue is resolved in two ways:

1) penalties in the form of restriction and imprisonment are not applied - upon full payment of taxes or other obligatory payments on deliberately hidden, understated profit (income). At the same time, provided for in Art. 184 of the Criminal Code, sanctions in the form of fines and correctional labor are still applied to those responsible;

2) complete exemption from criminal liability (no punishment is applied at all) - if the crime was committed for the first time and the perpetrators paid taxes and other obligatory payments in full within the prescribed period [1], plus penalties and other financial sanctions .

Secondly , damage not compensated voluntarily can be recovered through a claim from the tax authorities, filed during a criminal trial (a civil claim in a criminal trial) or in civil law.

When passing sentences in cases of this category, courts must resolve the civil claim brought.

Having made a decision to satisfy a civil claim, the court must indicate in the verdict the amount of money (including the amount of fines and penalties) to be recovered from the convicted person, and, depending on the type of unpaid tax, the name of the state budget (republican, local), targeted extra-budgetary funds, and also the state tax service authority at the taxpayer’s place of registration.

clause 17 of the resolution of the Plenum of the Supreme Court dated May 31, 2013 No. 08

«».

If several persons are held liable whose joint illegal actions caused damage (for example, the director and the chief accountant), the obligation to compensate for it is assigned to them jointly and severally. In this case, their personal property (CPC) may be seized as a security measure.

The tax office also has the right to file a claim in civil proceedings if:

• when considering a criminal case in court, a civil claim was not filed or was left by the court without consideration (Part 5 of the Code of Criminal Procedure);
• a criminal case was dismissed under the Criminal Procedure Code or a case of an administrative offense under Art. 271 CoAO, i.e. on non-rehabilitative grounds (including an act of amnesty).

Oleg Zamanov.

[1] Thirty days from the date of receipt of the decision of the state tax service body based on the results of consideration of the tax audit materials.

Types of tax obligations

There are a number of tax obligations for both individuals and legal entities.

Thus, individuals are required to pay taxes:

• on income (personal income tax) in the amount of 13% on all types of income, including wages, income from rental property, income from winnings, etc.;
• property tax, including real estate tax and transport tax.

Legal entities and individual entrepreneurs bear the following tax obligations, depending on the type and system of taxation:

• VAT;
• for the profit of legal entities (STS, UTII, OSN, PSN). For individual entrepreneurs – personal income tax;
• excise taxes;
• social.

Any deviations from the correct fulfillment of tax obligations are punishable (depending on the amount of damage to the state) either through administrative or criminal liability.

Article 122 of the Tax Code of the Russian Federation - Non-payment or incomplete payment of tax amounts (fees)

(as of 05/04/2017)

1. Non-payment or incomplete payment of tax amounts (fees, insurance premiums) as a result of understatement of the tax base (base for calculating insurance premiums), other incorrect calculation of taxes (fees, insurance premiums) or other illegal actions (inaction), if such an act does not contain signs of tax offenses provided for in Articles 129.3 129.5 of this Code

   entails the collection of a fine in the amount of 20% of the unpaid amount of tax (fee, insurance premiums) .

2. Lost force (based on the Law of May 28, 2003 No. 61-FZ)
3. The acts provided for in paragraph 1 of this article, committed intentionally

   entail the collection of a fine in the amount of 40 percent of the unpaid amount of tax (fee, insurance premiums) .

4. Non-payment or incomplete payment by a responsible participant of a consolidated group of taxpayers of amounts of corporate income tax for a consolidated group of taxpayers as a result of an understatement of the tax base, other incorrect calculation of corporate income tax for a consolidated group of taxpayers or other unlawful actions (inaction), if they are caused by a message, shall not be recognized as an offense false data (failure to report data) that affected the completeness of tax payment by another participant in the consolidated group of taxpayers held accountable in accordance with Article 122.1 of this Code. (Clause 4 introduced by Law dated November 16, 2011 No. 321-FZ)

Commentary on Article 122 of the Tax Code of the Russian Federation

The commented article establishes liability for non-payment or incomplete payment of tax.

As evidenced by judicial practice (see, for example, Resolutions of the FAS Volga District dated March 30, 2006 N A12-29806/05-C51, FAS Far Eastern District dated April 6, 2006 N F03-A04/06-2/738), the fact itself failure to pay taxes on time is not a sufficient condition for applying liability under Article 122 of the Tax Code of the Russian Federation, unless the tax authority has proven the taxpayer’s guilt, which is a mandatory element of a tax offense.

As can be seen from the wording of the article, the mere fact of non-payment of tax on time is not a sufficient condition for the application of liability under Article 122 of the Tax Code of the Russian Federation, if the tax authority has not proven the taxpayer’s guilt, which is a mandatory element of a tax offense.

Incorrect indication of the budget classification code (BCC), as well as incorrect indication of the status of the person making the payment, does not lead to the taxpayer’s debt to the budget, since the payment can be identified by “indirect” data, and the tax authority can independently attribute the received funds if it is impossible to unambiguously determine payment. Consequently, the offense provided for in Article 122 of the Tax Code of the Russian Federation is not formed.

There are disputes about the right of the tax authority to make a decision on bringing the taxpayer to tax liability under Article 122 of the Tax Code of the Russian Federation, based on data on the flow of funds in the taxpayer’s account received from the bank in which the organization (IP) has a current account.

In my opinion, in this case the tax authorities themselves violate the laws because in the absence of a declaration submitted to the tax authorities (i.e., only on the basis of other documents and information) is illegal, since an audit carried out in violation of the laws does not entail legal consequences.

There are cases when the taxpayer paid the amount of tax according to the updated declaration, but did not pay the penalty. There is no consensus on the legality of applying liability: some experts believe that penalties are legal, others believe that a fine can only be imposed for non-payment of tax amounts, and not penalties. There is no consensus on this issue in arbitration practice.

It must be borne in mind that tax liability is not limited to this article, because Article 75 of the Tax Code also provides for a penalty for late payment of tax.

Statute of limitations for prosecution

According to Article 113 of the Tax Code, the statute of limitations for bringing a person to tax liability is 3 years . It is within three years that the tax authority may make a decision to bring the person who committed the tax offense to justice.

The statute of limitations is calculated from the day following the end of the tax period, as a result of which non-payment or incomplete payment of tax amounts was revealed. For example, for property taxes of individuals, the statute of limitations is calculated from November 2, and from 2020 - until October 2.

In relation to tax agents, the statute of limitations for holding them accountable is calculated from the day the tax offense was committed.

Tax avoidance

One of the unlawful acts for which Article 122 of the Tax Code provides for tax liability is non-payment (incomplete payment) of tax (fee) amounts as a result of:

• understatement of the tax base;
• other incorrect calculation of tax (fee);
• other unlawful actions (inaction).

The amount of liability for non-payment (incomplete payment) of tax (fee) amounts depends on the form of guilt in the commission of the offense. So, if the tax offense was committed due to negligence (clause 3 of Article 110 of the Tax Code), then the amount of the fine is 20% of the unpaid amount of tax (clause 1 of Article 122 of the Tax Code). And if the same offense was committed intentionally (clause 2 of Article 110 of the Tax Code), then the amount of the fine doubles and amounts to 40% (clause 3 of Article 122 of the Tax Code).

An example of deliberate tax evasion is cooperation with shell companies.

Absence of an offense

Paragraph 1 of Article 109 of the Tax Code provides that a person cannot be held accountable for committing a tax offense if there is no event of a tax offense.

Failure to pay taxes results in the taxpayer's debt to the relevant budget. But if the taxpayer has an overpayment for the same tax, which can be offset against the arrears, then such non-payment (underestimation of the amount of tax transferred to the budget) does not lead to the formation of a debt to the budget.

It is also not a tax offense to accrue and pay wages in an amount less than the legally established minimum wage (letter of the Federal Tax Service of Russia dated March 19, 2009 No. 3-6-04/66). In this case, labor laws are violated, not tax laws.

Responsibility under the Tax Code

First of all, it should be understood that the responsibility established in the Tax Code is the same administrative responsibility, although not included in the Administrative Code.

The main types of offenses in the field of tax obligations of the Tax Code of the Russian Federation include:

• “shadow activity” or failure to register with the Federal Tax Service as a tax payer (Article 116 of the Tax Code);
• incorrect calculations of tax obligations (Article 120 of the Tax Code of the Russian Federation);
• evasion of submitting a declaration, explanations and documents to the Federal Tax Service (Articles 119, 123, 122 of the Tax Code of the Russian Federation).

That is, as we see, the Tax Code regulates liability only in terms of organizational issues related to the Federal Tax Service.

Understatement of the tax base for VAT

To calculate the amount of VAT, you must first correctly formulate the tax base. Each company must do this independently, based on the characteristics of its activities. The formula for calculating the tax base itself is quite simple. However, calculating the individual components is quite difficult. Therefore, errors creep into the calculations, and as a result, the tax base is unintentionally underestimated.

Typical errors when calculating the tax base are the erroneous determination of the object of taxation; erroneous application of the tax rate and unlawful use of the “input” VAT deduction. The reasons for the errors lie in the incorrect qualification of a fact of economic life; failure to timely take into account the fact that occurred; arithmetic and logical errors in primary documents; typos; double registration of the same event based on different documents. Often the reasons for errors are the lack of original contracts, primary documents and invoices. However, the main problem is the lack of qualifications of the accountant. An employee’s lack of professionalism is expensive, and the manager has to pay for it.

However, businessmen themselves sometimes deliberately underestimate the tax base in order to obtain tax benefits, which sooner or later leads to liability under the law.

How is the tax base calculated?

The general principle of forming the tax base is the same for all VAT payers and is calculated using the formula:

NOB = (ObN x StN) – NV

NOB – taxable base.

ObN is an object of taxation. The objects of taxation for VAT purposes are: sales of goods or services on the territory of Russia or in the export regime; partial payment (i.e. advance) towards upcoming deliveries; transfer of goods or provision of services for one’s own needs on the territory of Russia; carrying out construction and installation work for own consumption; import of goods in import mode.

StN – tax rate. Today the following VAT rates apply: 0%, 10%, 20%. The application of a particular rate depends on the object of taxation. The rate that should be used when calculating the taxable base can be determined using Article 164 of the Tax Code of the Russian Federation.

NV – tax deductions. Tax deductions are the amount of tax by which the tax base is reduced. Typically, these amounts are paid to suppliers as part of the cost of goods or services.

Code of Administrative Offenses

In accordance with the provisions of the Code of Administrative Offenses of the Russian Federation, namely Art. 15.34, 15.9, 15.11, officials of organizations and enterprises are brought to administrative responsibility for offenses related to:

• with untimely registration as a taxpayer;
• with late submission of tax reports;
• with refusal to provide documents to employees of the Federal Tax Service who exercise control over the calculation of tax payments;
• with violations in maintaining accounting records.

What besides fines?

Persons held accountable for violations in the field of taxation, in addition to an administrative fine or criminal punishment, may also be required to pay penalties accumulated during late payments.

In case of deliberate tax evasion, penalties of up to 40% of the accrued tax may also be applied. It should be taken into account that when calculating penalties and fines, the last 3 years of the taxpayer’s history are taken into account.

As a rule, the penalty is calculated based on the refinancing rate approved by the Central Bank of the Russian Federation.

Prosecution for tax offenses: what and who faces the consequences

An offense in the fiscal sphere is an illegal action (inaction), for which liability is established in the Tax Code of the Russian Federation, committed by a taxpayer, insurance premium payer, or tax agent. The list of possible tax offenses is given in Chapter 16 of the Tax Code of the Russian Federation and is divided into the following main groups:

• violation of the procedure for registering a taxpayer with the Federal Tax Service;
• violation of the procedure for submitting tax reporting;
• errors in accounting, which led to a distortion of the tax base;
• non-transfer (including payment not in full) of insurance premiums, fees and taxes;
• failure to provide tax authorities with the requested documentation or submission of inaccurate data.

Each group contains a wide range of actions (or inactions) of persons violating a certain rule of law, for each of which a range of responsibility is determined depending on the severity of the offense.

The responsibility of persons for committing tax offenses is determined not only by the Tax Code of the Russian Federation, but also by the Code of Administrative Offenses of the Russian Federation, and for serious acts - by the Criminal Code of the Russian Federation. The variety of punishments is due to the same variety of violations, as well as their varying degrees of severity and the amount of damage caused to the state budget.

It is possible to prosecute a violator for illegal acts in the field of fiscal legislation only by decision of the Federal Tax Service or a court. They can punish:

• organization;
• IP;
• an individual, if at the time of the violation he was sixteen years old (Article 107 of the Tax Code of the Russian Federation).

The category of the guilty person also determines which court will hear the case:

• for entrepreneurs and organizations - arbitration court;
• for individuals – a court of general jurisdiction.

In order for a company, entrepreneur or individual to be found guilty, the following conditions must simultaneously be met:

• basis in the form of a current legislative framework;
• proven fact of committing an illegal act;
• a formalized decision of the authorized body to impose a penalty or the presence of signs of a tax crime established as a result of operational measures

In addition, an important condition is compliance with the statute of limitations: prosecution for committing a tax offense is permissible only within three years from the date of its commission (Clause 1 of Article 113 of the Tax Code of the Russian Federation), with the exception of criminal offenses. For offenses falling under Article 120 (gross violation of tax accounting rules) and 122 of the Tax Code of the Russian Federation (non-payment of taxes, fees, insurance premiums), the three-year period is counted from the day following the end of the reporting period. If the violation is classified as a criminal offense, the statute of limitations may extend to ten years.