THE DIFFERENT TYPES OF TAX ASSESSMENT

THE DIFFERENT TYPES OF TAX ASSESSMENT

As stated in the previous article, https://bit.ly/46SpFRy, the Internal Revenue Service, when from the check on the taxpayer's economic position it detects the presence of elements indicative of the taxpayer's ability to pay inconsistent with the personal income declared by him, proceeds to assessment in order to verify the correctness of the declared data.

Depending on the method of assessment used, the assessment may be:

analytical, through analysis of accounting and tax records;
analytical-inductive, or mixed, based on documentary examination and presumptions, usually based on serious, precise and concordant elements, except in cases of omitted declaration or unreliable/omitted accounting;
inductive, through the exclusive use of presumptions that may also be exclusively simple;
synthetic, that is, based on ministerial coefficients.

THE ANALYTICAL-INDUCTIVE ASSESSMENT

The analytical-inductive assessment is used against taxpayers who are obliged to keep accounting records: through this type of control, the Internal Revenue Service can take action on the overall restatement of income (compensation, revenue and turnover) and costs/expenses, elements indicated in the tax return and financial statements, if any.

Specifically, the typology is defined by Article 39 Presidential Decree 600/73, paragraph 1(d), which states the following: "if the incompleteness, falsity or inaccuracy of the elements indicated in the declaration and its annexes results from the inspection of the accounting records and other verifications, or from the control of the completeness, accuracy and truthfulness of the accounting records on the basis of the invoices and other acts and documents relating to the enterprise, as well as the data and information collected by the office in the prescribed manner, the existence of undeclared assets or the non-existence of declared liabilities can also be inferred on the basis of simple presumptions, provided that these are serious, precise and concordant. ".

The major difference with the analytical assessment lies in the fact that the analytical inductive adjustment does not have as a prerequisite a fact or a document that directly proves the violation of tax regulations but several mutually agreeable simple presumptions, which infer the existence of undeclared assets or the nonexistence of declared liabilities.

Adjustment has as its prerequisite the detection of a certain fact, such as when the financial statements show recharge rates on sales below the industry average, which, on the basis of certain precise and concordant presumptions, makes it possible to arrive at the uncertain fact represented by the undeclared asset or nonexistent liability.

The presumptions referred to in Art. 39 Presidential Decree 600/73 are relative, which gives the taxpayer the right to provide contrary evidence: conceptually, contrary evidence consists of the demonstration, on the basis of the same presumptive elements or others not considered by the Public Administration, of the existence of an uncertain fact different from the one ascertained.

The reference made by the legislator to certain, precise and concordant presumptions does not allow recourse to the institute under comment in cases where the elements underlying the presumptions are not certain facts but other presumptions: in this case, in fact, the assessment would be voidable due to a defect in the formation of the will of the Public Administration, so-called excess of power, since the assumption of the higher revenues would not be a certain fact but another presumption.

The figure of presumptive analytical assessment can also be used to counter so-called uneconomic behavior: in this case, the certain and precise elements consist of the behaviors that are absolutely contrary to the canons of economics, which the taxpayer cannot absolutely justify, and which are aimed at obtaining otherwise undue tax benefits. The Supreme Court of Cassation has specified that the use of inductive analytical assessment is legitimate if the tax authorities have applied the presumptive parameters, tailored to the taxpayer's specific situation, and have weighed and disregarded the taxpayer's proposed administrative challenges: for example, even a statistical figure represented by the average markup of the taxpayer's industry may constitute a relative presumption suitable for reconstructing the taxpayer's real ability to pay; it follows that, the average value can only represent a certain piece of evidence if it is actually representative of the taxpayer's economic reality.

THE PURE INDUCTIVE ASSESSMENT

Pure inductive assessment is when the omissions or false or inaccurate indications are such as to affect the reliability of all accounting data, the Internal Revenue Service office may disregard all or part of the results of the financial statements and accounting records as they exist, proceeding to determine the taxable income on the basis of presumptions that are also not serious, precise and concordant.

Article 39, paragraph 2, Presidential Decree 600/73 states precisely that: "notwithstanding the provisions of the preceding paragraph, the tax office determines the business income on the basis of the data and information however collected or that has come to its knowledge, with the power to disregard all or part of the results of the financial statements and accounting records insofar as they exist and also to make use of presumptions lacking the requirements referred to in letter d) of the preceding paragraph." The above occurs, for example, when:

business income has not been disclosed in the declaration,
the balance sheet with the profit and loss account has not been attached,
it appears from the inspection report that the taxpayer has not kept or has withheld from inspection one or more accounting records,
the omissions and false or inaccurate entries, or formal irregularities in the accounting records are so serious, numerous and repeated that the records as a whole are unreliable
the taxpayer has failed to comply with the invitations ordered by the competent offices,
has failed to submit the forms for the communication of data relevant to the sector studies, ISA or in the case of false compilation with results in a difference of more than 15 percent or 50 thousand euros, between the revenues or compensation estimated by applying the sector studies and those actually declared.

The method then relies on presumptions by the Internal Revenue Service, which can also be simple, lacking the requirements of analytical-inductive assessment.

THE PARTIAL ASSESSMENT

Lastly, we consider the partial assessment as defined by Article 41-bis Presidential Decree 600/73: it is a special form of assessment that allows the Internal Revenue Service to adjust the income or other tax assumption declared by the taxpayer, without limiting the possibility of subsequent assessment actions, by virtue of information obtained from qualified parties, such as central assessment directorate, regional directorate, local Internal Revenue Service office or other administrative offices, which reasonably suggest tax irregularities, such as:

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