What kind of checks do individual entrepreneurs have: types, reasons and who conducts them

What the law says about tax audits of individual entrepreneurs

In Art. 88 and 89 of the Tax Code of the Russian Federation states that a tax audit must be carried out for each individual entrepreneur. It can be desk-based or on-site. Their difference lies in the principle of purpose of the check and the methods of its implementation.

Tax and individual entrepreneurs

Desk is a planned procedure, which is carried out in accordance with the rules of the inspection and is carried out directly in it. Here, specific declarations are subject to consideration, which the taxpayer submits on time. Employees check the compliance of the documentation with the real state of affairs and look for errors in the preparation of declarations. This procedure applies to all individual entrepreneurs without exception and does not require any special instructions for carrying out legal actions.

For your information! Only the organization’s reporting, its literacy and compliance with the requirements are checked. The entrepreneur is not notified about the start, no matter what tax system he is on.

On the contrary, an on-site inspection is considered a forced measure that became necessary during desk inspections. It can be either planned or unplanned. In any case, it provides for the direct arrival of tax office employees at the individual entrepreneur’s registration address. Already on site, the tax officer begins to check documentation, reports and compare physical indicators with those indicated in the declaration.

Results

An individual entrepreneur must be prepared for tax audits - desk and field.
He must also promptly submit the documents and information requested by tax authorities, and not interfere with the inspection of premises and territories, as well as other tax control measures within the framework of tax legislation. Procedures for inspections and submission of documents separately for individual entrepreneurs are not provided for in the Tax Code of the Russian Federation - they are carried out according to rules common to all taxpayers. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

How often are desk audits carried out?

How to change the tax system for individual entrepreneurs and how often can this be done?

Desk audits of individual entrepreneurs consist of monitoring submitted tax returns. The Law on Inspections of Legal Entities and Individual Entrepreneurs establishes that the tax authorities are allocated two months for this. This period begins to last from the moment the reports are submitted to the tax authorities. Desk audits comprise the bulk of the work of all tax employees. How often the tax office checks individual entrepreneurs on the simplified tax system, patent or UTII is directly affected by the frequency of filing tax returns. In general, this happens four times a year.

On-site tax audit

As you can guess from the name, this type of tax audit is of an on-site nature and is carried out on the territory of the individual entrepreneur.

Who can initiate an on-site inspection?

By law, only the head of the tax authority at the organization’s place of work has the right to initiate such an audit. That is, the territorial principle applies (clause 2 of Article 89 of the Tax Code).

Exceptions to this rule apply only to large companies and organizations that have remote branches and divisions. In this case, the tax authority that registered the organization can initiate an on-site audit, even if it is geographically located in another region.

Repeated on-site inspections on the same issue are not permitted by law. An exception is those cases when other violations were identified during the inspection process. In this case, tax authorities may initiate a repeat audit.

How long does an on-site inspection take?

The duration of the on-site inspection should not exceed two months. But there are exceptions here too. The check may take longer if:

• individual entrepreneurs have separate divisions;
• During the on-site inspection, other violations were identified that require additional verification;
• The individual entrepreneur delays the submission of documents required for inspection;
• force majeure circumstances occurred.

What can the inspection check?

During an on-site inspection, the inspectorate determines whether taxes have been calculated and paid correctly. They can check either one tax or several at once. Individual entrepreneurs are required to provide access to accounting documents for these taxes.

In addition, during the inspection the inspection has the right to assign various control measures. For example, inspecting the premises in which the individual entrepreneur carries out his activities, calling a witness or seizing documents.

The subject of the check also depends on the special regime that the individual entrepreneur applies.

For example, when checking an individual entrepreneur on the simplified tax system, tax authorities first of all check the legality of using this special regime. And if they recognize the use of the “simplified tax” as unlawful, the entrepreneur will have to pay all taxes that are calculated for him according to OSNO (including penalties).

The situation is similar with individual entrepreneurs on UTII. Such entrepreneurs are recommended to check every month whether the documented conditions comply with the chosen taxation regime. And if potential risks arise, switch to “simplified” or OSNO.

What documents should an entrepreneur have?

Tax and individual entrepreneurs - how to register with the Federal Tax Service and what is needed for this

A full check of an individual entrepreneur involves the consideration of a number of documents that are directly related to the activity. What documents should an individual entrepreneur have in case of an audit? The following papers are of greatest importance:

• certificate of registration of a person as an individual entrepreneur. It will help you find out at what point the individual entrepreneur began to conduct its activities and function;
• documents confirming registration with the Pension Fund and the Health Insurance Fund;
• tax returns for periods of activity;

Entrepreneur's documents

• financial statements;
• bank statement confirming the existence of a current account;
• cash reporting (for retail trade and similar activities).

These are the basic documents that every entrepreneur needs to successfully pass the audit. In some cases, documentation may be required to demonstrate eligibility for a benefit.

Important! If the activities of an individual entrepreneur require a license, then this license must also be provided to tax office employees.

Eventually

After the inspection operation, the inspector draws up a report, one copy of which remains with the tax office, and the other is given to the entrepreneur. The report describes the progress of the inspection, the violations identified and the time frame for their elimination. An individual entrepreneur can appeal the act; he is given a period of 14 days to do this. The entrepreneur describes all the comments directly in the act, and then submits it to the local tax service.

Tax audits are regular, and it is worth preparing for them in advance. If an individual entrepreneur keeps honest accounting and does not violate current legislation, then only a desk audit awaits him. If the documents for verification of the individual entrepreneur are not in order, it is worth preparing for a more strict on-site inspection, and this does not always end well for the organization.

Types of checks

Tax amnesty for individual entrepreneurs - what is it, who will have their debts written off?

All inspections are divided into scheduled and unscheduled. Each of them has its own prerequisites and implementation features.

Planned

A scheduled inspection, as the name suggests, is carried out in accordance with a pre-approved plan. This plan is approved based on many factors, some of which are truly very large-scale. For example, the state decided to increase control over medical organizations and individual entrepreneurs, and in connection with this, a number of companies were included in the list.

The planned inspection is known in advance, since lists of inspected companies are posted on the Federal Tax Service website. You can prepare for such phenomena and avoid unpleasant incidents.

Unscheduled

Unscheduled inspections pose a great danger to an entrepreneur. They are usually applied to those organizations and individual entrepreneurs that have “tarnished” their reputation in the past. Such entrepreneurs are at risk. Often inspections may occur to identify violations that have already been found or to ensure that these same violations are eliminated.

An unscheduled inspection is also a logical response to a complaint from a person about the company’s activities. In this case, tax inspectors may unexpectedly appear at the organization and request all the necessary documentation. How often can the tax office audit an individual entrepreneur? The law establishes that inspections should not be carried out more than twice a year.

Grounds for checking IP

Every action of the tax authorities is supported by some reason. Depending on the type, the grounds for holding may vary. The Federal Law on inspection of legal entities and individual entrepreneurs provides for the following cases:

• increased attention of government agencies to a certain market segment due to policy changes;
• receiving a complaint about violations in business;
• completion of the period allocated by the inspection during the last inspection to eliminate violations;
• direct request of the prosecutor or other governing body.

Documents of an individual entrepreneur as an employer

When business is impossible without the involvement of additional labor, it becomes necessary to maintain additional documents. Hiring citizens for work entails additional responsibility and the preparation of appropriate reporting.

Once you start running your own business, you come under the constant control of the Social Insurance Fund (SIF) and, of course, the Federal Tax Service of the Russian Federation (FTS).

Each of these bodies expects an individual entrepreneur, who is an employer, to submit a certain list of individual documents.

The Federal Tax Service requires information from individual entrepreneurs with employees on form 2-NDFL until April 1 of the next year. In addition, the number of employees must be reported by January 20. In cases of closure of business activities, information on the number of employees is submitted before the date of deregistration.

Reports are sent to the Social Insurance Fund in 4-FSS format. Information is provided in paper form no later than the beginning of the second ten days of the month. In addition, data transfer is possible electronically.

The Russian Pension Fund requires an information document in the form RSV-1. It must contain data for the enterprise as a whole and individual accounting information for each individual employee.

An extract from the Unified State Register of Individual Entrepreneurs is also one of the most important documents.

What can happen to an individual entrepreneur?

If violations are discovered during a tax audit, the individual entrepreneur may face penalties. Here are a few of the most common violations:

• Tax reporting was not submitted on time. If the tax is not paid at all, the fine will be at least 1000 rubles*, plus 5% of the tax amount. If the declaration is simply not submitted, the fine is 1000 rubles;
• gross violation of the rules for accounting for income and expenses. A fine of 10 thousand rubles. depending on the results of violations;
• non-payment of taxes. A fine of 20 to 40% of the amount, plus penalties;
• violations of cash register operation. Fine from 10 thousand rubles.

Entrepreneur's responsibility

If the violation is removable, the inspection will allocate a certain time for this. After it expires, the inspection may come again. If the violation is not eliminated, more severe penalties will follow, including the seizure of accounts and a ban on business. All this can lead to the closure of the IP.

Tax audit after closing an individual entrepreneur

Carrying out tax audits is possible even after the individual entrepreneur has ceased its activities (deregistration). An entrepreneur can expect an inspection within three years from the date of termination of activity. Let us remind you that after cessation of activity and cancellation of state registration as an individual entrepreneur, the citizen will be deregistered with the tax authority as an individual entrepreneur, but will remain registered as an individual taxpayer. If violations are discovered during a tax audit, the individual entrepreneur faces prosecution.

Disputing the results

The results of a tax audit can be very disappointing for an entrepreneur. And this is predictable if the entrepreneur actually committed gross violations. If the entrepreneur does not agree with the results, he can file a complaint with a higher tax authority. This can be done during tax actions if they involve gross violations of current legislation. In this case, the entrepreneur draws up a special complaint and sends it to higher authorities and the prosecutor's office.

Disputing the results

Disagreement with the results can be expressed in a special act, which will be provided within a certain time from the moment of inspection. There, violations in the procedure are indicated and protests are expressed about the results. This act is sent to higher tax authorities.

Note! If the entrepreneur’s claim is found to be legal, a re-inspection will be carried out to change the decision. Otherwise, the complaint will be rejected and the results will remain the same. But even in this case, there is a chance to change the decision of the tax authorities by applying to an arbitration court.

Desk audit - main activities and their nuances

A desk audit is launched at the moment the entrepreneur submits the declaration and reporting documentation that is attached to it. Inspectors of the Federal Tax Service include in the verification the additional information they have on the private enterprise (current account balance, cash register control data).

Audit actions of tax authorities are a tool for replenishing the state budget. Overstatement or unauthorized use of benefits, errors and violations discovered during the inspection process provide a significant increase in payments. Therefore, the tax regulator carefully records all violations.

All declarations of private entrepreneurs are subject to desk audit, regardless of the tax regime under which the individual entrepreneur operates. Zero reporting is also considered during the audit. The regulator is given 3 months for this procedure - this is the maximum period for conducting a desk tax audit (CTA).

The purpose of a desk audit is to monitor the correct calculation of tax fees, identify tax evasion and other tax offenses, collect sanctions and fines, and (if necessary) prepare information for selecting applicants for an on-site audit. If during the 3 months that the CNI lasts, the regulator has not had any questions related to the calculated declaration data, then everything is in order and the desk audit is completed.

If a private entrepreneur does not submit a declaration within the deadline established by the Tax Code of the Russian Federation, he risks being subject to the most common sanction today - blocking of all current accounts. Tax officials have the right to do this when tax declarations are not submitted within ten days. At the same time, the regulator does not have the right to launch a desk audit without receiving tax reports.

If, after three months after submitting your tax reports, you have not received a letter from the Federal Tax Service, this means that the tax compliance process has been completed successfully

If employees of the Federal Tax Service still have questions about reporting or errors are discovered, an official letter is sent to the entrepreneur, which details the inconsistencies and contradictions. At this point, the businessman is usually asked to provide an adjustment declaration with updated calculations.

Let's look at what is considered errors in tax reporting. Miscalculations when declaring can be very diverse:

• from arithmetic errors when making calculations, incorrect execution of the declaration or errors in dates;
• to conflicting data in documents and calculated figures.

Having discovered such facts, tax authorities are obliged to inform the entrepreneur about the found miscalculations. The declarant is given 5 days to correct errors. During this period, you must provide explanations to the regulatory authority and adjust the declaration by making the correct calculations.

According to paragraph 4 of Article 88 of the Tax Code of the Russian Federation, a declarant in whose reporting an error was found or inconsistencies between the data were identified has the right to additionally send extracts from tax and accounting journals to the Federal Tax Service, as well as confirm the correctness of the information with other documents. This is the right of the individual entrepreneur, not his responsibility.

If an entrepreneur is ready to defend his rights, he can submit an updated declaration. It is recommended to attach as many documents as possible to the adjustment reports that support the explanations. Comments can be given in free form. The updated reporting is sent to the Federal Tax Service in the same way as the initial one. If adjustments are submitted before the end of the audit of the first declaration, controllers are required to review the comments and papers provided by the individual entrepreneur. In this case, the KNI is terminated and the audit of the newly submitted reports begins.

Since 2021, VAT declarations are carried out strictly in electronic form, therefore both comments and an updated declaration for this type of reporting are submitted strictly using electronic document flow.

If a businessman is unable to clearly formulate the reasons for contradictions and inconsistencies, or the regulator determines and proves the fact of violation of legal requirements, a desk audit report is prepared.

The template for the report based on the results of the audit, approved by the Federal Tax Service of the Russian Federation, must contain the following data:

• when the audit began and ended;
• on the basis of what reporting it was carried out;
• what facts of violations the audit revealed;
• the act must contain documented facts of violations (or their absence);
• conclusions, as well as proposals for eliminating detected violations;
• result with financial sanctions: amount of recovery, how the defendant should be held accountable, how much the VAT refund will be reduced, etc.

Documents confirming the facts of offenses are attached to the act.

If a private entrepreneur does not agree with the conclusions of the commission, he has the right, within fifteen days from the day the act was received, to send his arguments in writing and justify his opinion. Employees of the Federal Tax Service will analyze the arguments of the individual entrepreneur, evaluate them and make one of the decisions:

• on bringing the individual entrepreneur to responsibility;
• on the lifting of sanctions;
• about the beginning of additional control measures.

To analyze the resulting documentation and papers provided by the entrepreneur, tax authorities are given 10 working days after the objection period has passed. In certain particularly difficult cases, when the management of the Federal Tax Service cannot make a determination, additional control measures are prescribed. Then this period can be extended (maximum by 1 month). Such actions are regulated by the sixth paragraph of Article 101 of the Tax Code of the Russian Federation.

The entrepreneur will be notified additionally about the re-examination of the case. The defendant is required to be invited to the final analysis of the KNI materials by the regulatory authority.

After the end of the procedure, having analyzed the act and the entrepreneur’s objections to it, the tax authorities make one of two decisions: on the guilt of the individual entrepreneur in tax offenses and bringing him to justice, or on the acquittal of the entrepreneur.

Upon completion of the desk audit, within 5 days, the report is issued to the entrepreneur or his authorized representative against receipt. If the individual entrepreneur does not deliberately take away the effective document, this fact is recorded, the act is sent to the businessman by mail at the individual entrepreneur’s place of registration. After 6 days the paper is considered received.

After 1 month, the desk audit act comes into force, and if there is a fine or other sanctions, the entrepreneur will be required to pay off tax debts (according to the deadlines specified in the act).

In order to optimize the process, the inspector has the right to invite an individual entrepreneur to provide explanations

But this may not be the final stage of verification. If a businessman does not agree with the conclusions of the territorial inspectorate, he has the right to appeal the decision of the Federal Tax Service to a higher authority - the regional department of the tax service (FTS). The main thing is to have time to file an appeal before the decision comes into force. But the entrepreneur has 1 month from the moment the individual entrepreneur received the decision based on the results of the desk audit.

Do not rush to immediately file an appeal in court; the option of pre-trial settlement of the dispute may be more effective, since in this case the tax authorities will not be forced to defend themselves, and you will still have a chance to file a complaint in court. If you immediately go to court, this opportunity will no longer exist.

It should be noted the main advantages of pre-trial dispute resolution:

• no state duty or legal costs;
• the appeal is completed in a free form, no special knowledge is required;
• consideration and execution takes place within a short time frame.

The appeal is sent through the Federal Tax Service, which made the decision, and the addressee is the Federal Tax Service. This can be done either personally or through a legal representative (this can be any individual: a relative or a hired employee of a legal or consulting service). The complaint can be submitted in any way convenient for the applicant:

• on paper;
• online via electronic document management.

The appeal application is endorsed by an entrepreneur who does not agree with the conclusions of the Federal Tax Service on the desk audit. The second option is that a representative of the individual entrepreneur can also sign the complaint.

Let's look at what must be included in the appeal:

• Full name and registration address of the person sending the complaint;
• the essence of the complaint against the KNP act, the initial data according to which the applicant believes that his rights were violated;
• code and name of the Federal Tax Service;
• IP requirements;
• how to receive feedback and resolve the complaint;
• For a quick decision, please provide the applicant’s full contact information.

The appeal will have to be accompanied by documents that support the arguments in favor of the entrepreneur. The Federal Tax Service of the Russian Federation has an online service where you can track the status of your complaint in real time; you can view it using this link.

After considering an appeal against the findings of a desk audit, the Federal Tax Service may:

• uphold the previous decision;
• cancel the decision of the tax authority in whole or in part;
• cancel the decision of the Federal Tax Service and issue a new ruling on the case.

The results are sent to the applicant at the address specified in the complaint within three working days from the date of the decision.

A repeated appeal to the same body on the same grounds is impossible. If the Federal Tax Service leaves the decision of the lower authority unchanged, the next appeal can be filed either to the main tax authority - the Federal Tax Service of the Russian Federation, or to the court, or to both places at the same time. The deadline for such a step for a businessman is 3 months.

If the entrepreneur has compelling arguments and can justify the reasons for the delay in filing appeals, the individual entrepreneur has the right to file a complaint based on the results of the audit within one year after the decision on the KNI comes into force.

Summarizing the main points on the desk audit of a private business, we note several important points and stages:

• the Federal Tax Service has 3 months to verify the declaration data;
• to the requirements and clarification requests of the Federal Tax Service during the CNI, a response must be given within five days, all documents are provided within the same period;
• (if necessary) the updated declaration is submitted to the tax authorities within 5 days;
• at the same time, inspectorate employees do not have the right to demand from the individual entrepreneur documents submitted earlier (with the exception of originals that were returned to the declarant);
• the fine based on the results of the desk audit (if assigned) must be paid within 60 days;
• rarely, but there are cases when the controller orders an on-site tax audit (if the Federal Tax Service has suspicions of major tax violations).

Table: stages of passing the KNP - actions and deadlines