Controllers reason as follows. Accountable amounts for which the employee has not reported are his debt to the company. The organization has the right to withhold the debt from the debtor's salary no later than one month from the day when the deadline for submitting the advance report has expired (Article 137 of the Labor Code of the Russian Federation). If the employer does not withhold money, the tax authorities have the right to recognize this amount as a payment in favor of the employee within the framework of labor relations and impose insurance contributions (subclause 1, clause 1, article 420 of the Tax Code of the Russian Federation, clause 5 of the appendix to the letter of the Federal Tax Service of Russia dated April 14, 2015 No. 02-09-11/06–5250). In addition to additional assessments, tax authorities will also fine the company for non-payment and for distortion of personalized accounting information. If the employee later reports for the accountable amounts, the organization has the right to recalculate contributions. However, all this can be avoided if you follow the rules.
The lack of economic benefit will be proven by the company’s attempts to return the money
If the tax authorities make a claim, it would be advisable for the company to try to return the money during the audit. For example, if the amount of accountable funds is significant, enter into a written agreement with the employee that he will return the money in installments over a long period of time. The lack of income will be proven by the very fact of such an agreement and the first returns. The fact that an employee has violated the deadline for submitting an advance report is not a reason to charge additional personal income tax.
In one case, the director of the company did not report on accountable funds for more than a year. During this time, the debt grew to 88 million rubles. Tax officials did not miss the chance to get additional funds into the budget and offered the company to withhold personal income tax from this amount, imposed a fine and accrued additional penalties. The organization managed to win the dispute - the accountant and the company converted part of the amount into a loan, the director returned part of the amount to the company's cash desk, and the company returned part of it in court. The company decided to withhold the remainder from the salary in the amount of 50 percent.
The inspectors tried to challenge such re-registrations and returns, since they occurred after the inspection. But the court sided with the company. By default, accountable amounts are issued with the condition of reporting or return. Inspections must prove otherwise. They did not provide evidence that the employee received an economic benefit. All their arguments in favor of additional charges were based only on the violation of the deadline for submitting the advance report. The company tried to repay the debt, even after a tax audit. Consequently, in fact, the employee did not receive income, therefore fines and penalties are unlawful (Resolution of the Central District Administrative District dated July 19, 2016 No. F10-2385/2016).
The AC of the Central District agreed with this decision in its resolution dated November 2, 2016 No. F10-3997/2016. During the trial, the director will present documents regarding some of the funds issued. He returned the other part to the cashier. The court overturned the decision on additional assessment.
Accountability games are becoming more dangerous
In practice, quite often there are situations when employees do not return unused funds to the cash desk on time or an incorrectly completed initial statement is attached to the expense report. In this case, negative tax consequences cannot be avoided.
Unreturned report
First, let us recall the general rules for issuing money on account. To receive accountable funds, the employee must write an application in any form. It is endorsed by the head of the organization indicating the amount and period for which it is issued. After the expiration of the specified period, the employee must account for the funds received. This must be done no later than three days after the expiration date for using the accountable amounts. For these purposes, the employee draws up an advance report and attaches to it documents confirming the expenses incurred (clause 4.4 of the Regulations of the Central Bank of the Russian Federation dated October 12, 2011 No. 373-P).
The employee will have a debt
If an employee does not report on time and also does not return the accountable amounts to the organization’s cash desk, then he will be included in the accounting records as a debt. An accountant can withhold a debt from an employee’s salary (Article 137 of the Labor Code of the Russian Federation). Moreover, the amount of deduction cannot be more than 20% of the amount of wages paid (Article 138 of the Labor Code of the Russian Federation). Please note: the debt can be repaid in this way if the employee agrees that deductions will be made from his salary. Keep in mind that the manager has a month to make such a decision. It is counted from the date when the employee should have returned the funds to the cash desk.
But a situation may arise when the employee does not agree with the retention or the manager missed the deadline for making the appropriate decision. In this case, the debt can only be collected through court. The Labor Code allows a year to file a claim (Article 392 of the Labor Code of the Russian Federation).
If an employee is in debt, two questions arise. First, is it necessary to withhold personal income tax on debt amounts? Second, is the employee’s debt subject to insurance contributions to extra-budgetary funds?
Disputes regarding personal income tax...
As long as the employee has a debt in the accounting records, we can say that the funds have not become his property. After all, until the money is returned, the employee has an obligation to pay the organization. And if so, then no income subject to personal income tax arises.
The issue of taxation of unreturned accountable amounts with personal income tax was considered by specialists from the financial department in letter dated September 24, 2009 No. 03-03-06/1/610. In it, financiers reminded that funds issued on account must be returned to the organization's cash desk. To do this, the company must take all measures provided for by law (we talked about them just above).
In the event that all attempts to repay the debt have failed, the moment the employee receives income in the form of unreturned accountable amounts will be the date from which such collection became impossible (the expiration of the three-year limitation period) or the date of the decision to forgive the debt. If it is impossible to withhold the calculated amount of tax from the employee, the organization, as a tax agent, must notify the tax authorities about this circumstance. This must be done no later than one year from the end of the tax period in which the relevant circumstances arose (clause 5 of Article 226 of the Tax Code of the Russian Federation). In our case, this is the date of expiration of the statute of limitations or the date of the decision to forgive the debt.
However, in practice, tax authorities include unreturned accountable amounts in the income of employees without waiting for the expiration of the statute of limitations. This is confirmed by numerous judicial practices. Note that it is in favor of taxpayers. The arbitrators reject the tax authorities' claims and come to the conclusion that accountable amounts not returned on time cannot be considered income of individuals. Consequently, no object of taxation arises.
The judges indicate that the funds issued to the employee on account are intended for the purchase of inventory (work or services) for the needs of the organization. Such amounts form the individual’s debt to the organization and are not his income. The tax authority does not have the right to reclassify funds issued on account as employee income until the statute of limitations for collecting these amounts has expired. Such arguments are contained in the decisions of the Federal Antimonopoly Service of the North-Western District dated 02.11.2009 No. A05-7405/2007, the North Caucasus District dated 09.14.2009 No. A32-27520/2008-19/520 (Determination of the Supreme Arbitration Court dated 01.11.2010 No. VAS-17159 /09 refused to transfer this case to the Presidium of the Supreme Arbitration Court of the Russian Federation), Volga-Vyatka District dated November 12, 2008 No. A43-3598/2008-6-65, Volga District dated August 31, 2006 No. A55-35478/05-43.
...and insurance premiums
As for the arbitration practice on the issue of taxation of unreturned accountable amounts with insurance premiums, it has only just begun to take shape. We were able to find only one court decision on this problem - resolution of the Federal Antimonopoly Service of the Volga-Vyatka District dated December 7, 2012 No. A43-14173/2012.
During the inspection, Pension Fund specialists discovered that the funds issued to the employee on account were not returned to the organization’s cash desk, and there was also no advance report on the use of these funds. The Fund considered that in the situation under consideration, the accountable amounts are the employee’s income and should be subject to insurance premiums. The company was held liable. She did not take any action (she did not file a lawsuit and did not pay any fines). The Fund made another decision to collect insurance premiums, penalties, and fines from the funds in the organization’s bank accounts. And it was his organization that decided to challenge it in court.
The court of first instance and the court of appeal were on the side of the organization. Here is their reasoning. In the cash disbursement orders for the issuance of money for reporting, in the “Bases” column, it was indicated that the funds were intended to pay for business expenses. The object of taxation with insurance premiums is payments and other remuneration in favor of individuals made within the framework of labor relations (Part 1, Article 7 of Federal Law No. 212-FZ of July 24, 2009).
Labor relations are relationships based on an agreement between employees and the employer on the personal performance by the employee for payment of a labor function (Article 15 of the Labor Code of the Russian Federation). They arise on the basis of an employment contract (Article 16 of the Labor Code of the Russian Federation). Remuneration is understood as remuneration for work depending on the employee’s qualifications, complexity, quantity, quality and conditions of the work performed, as well as compensation and incentive payments (Article 129 of the Labor Code of the Russian Federation).
On this basis, the court indicated that the object of taxation of insurance premiums are payments that are remuneration. And the funds received under the report for business needs do not relate to any type of income received by employees under an employment contract. Therefore, such amounts are not included in the base for calculating insurance premiums.
As for the lack of supporting documents about the expenditure of accountable funds or their return to the organization’s cash desk, this is not evidence that the disputed amounts can be attributed to the employee’s income.
The pension fund managed to challenge the judicial acts in cassation. The fact is that the court of first instance and the appeal considered questions about the legality of imposing insurance premiums on accountable amounts, while the subject of the claim was the collection of arrears and penalties from the company’s funds in banks. The cassation overturned the decisions of the lower courts, sending them for a new trial.
In our opinion, despite the fact that the Foundation won this trial, the reasoning of the courts of first instance and appeal can be taken into account. They can be used in the event that PFR controllers make claims regarding the legality of imposing insurance premiums on unreturned accountable amounts, and it is this decision that will be challenged in court.
Problems with the primary
Another problem that the company may face. Let's assume that an employee has reported on the use of imprest amounts - he has drawn up and submitted an advance report to the accounting department on time. However, the primary documentation confirming the expense is completed with errors or is missing altogether.
If the organization approves the advance report and closes the sub-report, the tax authorities will most likely make claims and include the amounts on such reports in the income of employees. In letters from the Federal Tax Service of Russia for Moscow dated October 12, 2007 No. 28-11/097861 and dated March 27, 2006 No. 28-11/23487, tax officials explained the following. If employees have reported on the amounts issued for the report, but supporting documents are not attached to the advance report or they are drawn up incorrectly, then in such a situation the accountable amounts are the income of individuals and are subject to personal income tax in the general manner.
Arbitration practice on this issue is ambiguous. Some courts support taxpayers. They come to the conclusion that there are no grounds for additional personal income tax assessment if employees have not fully accounted for accountable funds, for example, documents confirming expenses have not been submitted (Resolution of the Federal Antimonopoly Service of the Moscow District dated November 11, 2009 No. KA-A41/11723 -09), or the primary document was issued in violation of accounting legislation (Resolution of the Federal Antimonopoly Service of the North-Western District dated 02.08.2012 No. A05-7569/2011).
But there are decisions in favor of inspectors. Thus, in the resolution of the Federal Antimonopoly Service of the West Siberian District dated May 31, 2007 No. A46-5176/2006, the arbitrators indicated that in the absence of documents confirming the expenditure, accountable funds should be regarded as the employee’s income. And in the resolution of the Federal Antimonopoly Service of the Ural District dated December 19, 2008 No. A76-2182/08, the judges considered it legal to additionally accrue personal income tax to an employee in a situation where the invoice attached to the advance report was drawn up with violations.
An interesting fact is that on March 5 of this year, the Presidium of the Supreme Arbitration Court of the Russian Federation considered, as a matter of supervision, two cases on the issue of the legality of imposing personal income tax on accountable amounts in the absence of documents confirming the expenditure. Let us note that the essence of the dispute in these cases is absolutely the same, and the persons involved are the same. Therefore, the Presidium of the Supreme Arbitration Court of the Russian Federation decided to consider one case and make a decision on the second by analogy. What was the reason for the trial?
The company regularly withdrew funds from the current account and received them at the cash desk. Subsequently, these amounts were issued for reporting to the director of the company. During the audit, tax officials discovered that the funds issued against the report were covered by advance reports. However, they were not accompanied by documents confirming payment for inventory items. There were also no documents confirming the acceptance of inventory items for accounting.
The tax authorities suggested that the company withhold personal income tax from the entire amount of funds issued for reporting and transfer it to the budget. In addition, the organization was brought to justice under Art. 123 of the Tax Code of the Russian Federation for failure to fulfill the duties of a tax agent. The company did not agree with this decision of the tax authorities and went to court.
The first court instance and the appeal did not satisfy the stated requirements and sided with the controllers. The judges indicated that in the absence of supporting documents, the amount of money received on account by an individual is subject to inclusion in the personal income tax base.
But the cassation supported the organization (resolutions of the Federal Antimonopoly Service of the North Caucasus District dated June 18, 2012 No. A53-270/2011 and dated July 5, 2012 No. A53-8405/2011). The arbitrators found no grounds to hold the taxpayer accountable, noting that the inspectorate did not provide evidence that the individual received economic benefits. At the same time, the judges referred to the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated September 3, 2009 No. 11714/08, which stated that the absence of a basis for taking into account expenses in the form of the cost of acquired inventory and materials when calculating income tax has no relation to the procedure for calculating personal income tax.
The tax authorities appealed to the Supreme Arbitration Court. The panel of judges, making the relevant determinations, indicated that the cassation instance did not take into account one point. The legal position of the Presidium of the Supreme Arbitration Court of the Russian Federation, set out in Resolution No. 11714/08 dated September 3, 2009, is applicable to the consideration of cases in which organizations have documents confirming expenses (although they were received from companies not registered in the Unified State Register of Legal Entities), and inventory items are accepted for accounting Only in this case, individuals do not have income subject to personal income tax. In the cases under consideration, other factual circumstances were present - there was no primary document confirming the expense and inventory items were not accepted for accounting (determinations of the Supreme Arbitration Court of the Russian Federation dated December 24, 2012 No. VAS-14376/12 and December 24, 2012 No. VAS-13510/12).
These arguments were also supported by the Presidium of the Supreme Arbitration Court of the Russian Federation, canceling the decisions of the FAS of the North Caucasus District dated June 18, 2012 No. A53-270/2011 and dated July 5, 2012 No. A53-8405/2011 and upholding the decisions of the court of first instance and appeal.
As you can see, the chance of winning a dispute in a situation where supporting documents are not attached to the expense report and inventory items are not accepted for accounting is currently zero. In this case, accountable funds will be included in the income of employees. Consequently, these amounts will be subject to personal income tax in the general manner.
In our opinion, in connection with the adoption of such a decision by the Presidium of the Supreme Arbitration Court of the Russian Federation, the chance of winning in court is reduced even in a situation where the company’s employees have not returned the funds taken into account at all. After all, the absence of a confirming primary document and the fact of acceptance of inventory items for accounting can be equated to non-return of accountable amounts.
It is better to issue money for a long term. It's safer
The company has the right to set a separate deadline for each accountable amount. This needs to be fixed in an order or memo. You can prescribe a single reporting deadline for everyone or fix different deadlines depending on the level of the position or the purpose of the money. For example, an accountant has three months to buy rare parts and report on these expenses. The deadline for the report on the purchase of household needs is three working days.
However, the above orders must be created in advance. In one of the cases, the company set a period of 24 months for reporting on funds. But she lost the trial because she presented an order for such a long term during the trial. During the audit of the company, the tax authorities did not see him. The judges considered the company’s actions to be an evasion of additional charges, and therefore did not take the order into account (resolution of the Third AAS dated September 28, 2015 No. 03AP-4126/2015).
If you miss the statute of limitations, you will have to pay personal income tax
If more than three years have passed since the date on which the employee was supposed to account for the accountable amounts or return them, the statute of limitations is considered to have expired. The company will not be able to repay the overdue debt even through court. In such cases, judges recognize that the employee received an economic benefit, which is subject to personal income tax (Resolutions of the North-Western District No. F07-5021/2016 dated 07/14/16, Central District No. F10-3997/2016 dated 11/02/16). If the statute of limitations has not expired, the accountable money is the employee’s debt (Resolution of the Fourth AAS dated March 25, 2015 No. 04AP-726/2015).
To protect themselves, organizations sign agreements with employees to repay the debt in installments, acts of reconciliation, or receive letters from them acknowledging the debt. In these ways, companies trigger the limitation period in a new circle (Article 203 of the Civil Code of the Russian Federation, paragraph 20 of the Resolution of the Plenum of the Armed Forces of the Russian Federation dated September 29, 2015 No. 43). But the reconciliation report or other documents must be signed before the expiration of the statute of limitations, otherwise they will not save you from the claims of the tax authorities (Resolution of the AS of the North-Western District dated July 14, 2016 No. F07-5021/2016).
It is necessary to indicate the basis for issuing accountable funds
Money issued on account cannot be considered a labor payment to an employee, as recognized by the Volga Region Autonomous District, Resolution No. F06-3232/2015 dated 12/09/15. The company issues funds so that the employee purchases goods or work for its needs. Money and goods do not become the property of the accountable. The absence of supporting documents does not prove that the employee received an economic benefit. The AS of the West Siberian District came to the same conclusion in its resolution dated September 30, 2014 No. A27-16522/2013.
Accountable funds cannot be considered payments under an employment contract, which means that insurance premiums do not need to be charged on them (Resolution of the Moscow District AS of December 23, 2016 No. F05-12835/2016).
A similar conclusion is contained in the resolution of the Volga District Court of December 25, 2015 No. F06-4463/2015 (upheld by the decision of the RF Armed Forces dated April 21, 2016 No. 306-KG16-3205).
However, if the organization systematically issues accountable funds to the director and does not indicate their purpose, the inspectors will file claims (Resolution of the Central District AS dated November 2, 2016 No. F10-3997/2016). Which side the court takes will depend on the circumstances of the case.
To avoid litigation, it is worth indicating the reasons for issuing money in official notes or orders: for the purchase of goods, for business needs, etc. But the purpose of accountable funds must correspond to the employee’s position. For example, the director can be given money for entertainment expenses.
In one case, the company gave money to an employee. The basis for issuing funds was the issuance of an interest-free loan to another company. The employee attached the borrower's receipt orders to the advance report. Inspectors suspected fraud and included accountable amounts in the employee’s income. The court removed the additional charges (resolution of the Arbitration Court of the North-Western District dated January 27, 2015 No. A42-3672/2012).
Court verdict: when accountable amounts are subject to personal income tax
The Arbitration Court of the North-Western District, in its resolution dated October 15, 2020 No. A66-6506/2019, recognized that the tax inspectorate justifiably assessed additional personal income tax on the amounts of funds issued by the organization as accountable funds to its general director.
Subject of dispute
: for two years, the organization issued daily amounts of money to its general director for reporting. In total, the general director received over 35 million rubles from the organization. At the same time, proper advance reports and primary documents for these amounts were not provided. Based on the results of the audit, the Federal Tax Service came to the conclusion that these funds are the income of the general director. The inspectorate ordered the organization to withhold and transfer previously unpaid personal income tax from the general director’s income, as well as to pay a fine for late payment of tax. Having disagreed with the decision of the Federal Tax Service, the organization went to court.
What were they arguing about?
: 6,114,632 rubles.
Who did win
: tax authorities.
Challenging the actions of the tax authorities in court, the organization pointed out that the funds issued to its employee on account are not the income of this employee, which is subject to personal income tax.
The fact that the employee did not report on the issued funds within the prescribed period only indicates a violation of the procedure for conducting cash transactions, but does not confirm that the accountable funds became the property of the employee.
Consequently, in the opinion of the organization, the Federal Tax Service had no grounds for additional assessment of personal income tax and a fine for this tax.
The cassation court found the organization's arguments untenable and sided with the tax authorities. The judges explained that in the absence of evidence confirming the expenditure of accountable funds, as well as the posting of inventory by the organization, these funds are considered the income of the accountable person. Accordingly, these funds are subject to inclusion in the tax base for personal income tax (Article 210 of the Tax Code of the Russian Federation).
According to the current rules, the accountable person, no later than 3 working days after the expiration date for which he was given cash, must present to the chief accountant an advance report with attached supporting documents (clause 6.3 of Bank of Russia Directive No. 3210-U dated March 11, 2014).
Documents confirming the material costs of an accountable individual can be sales receipts, invoices with cash receipts attached, or receipts for receipt orders confirming payment for any goods (work, services).
In the controversial case, sums of money were issued without execution of orders and applications for their release on account. The organization was unable to provide documents confirming the acquisition and payment of inventory items from accountable amounts and their posting.
Travel certificates and orders for sending employees on business trips were not attached to the advance reports. No adequate evidence was provided regarding the expenditure of the disputed funds for production needs. Moreover, for a number of advance reports, the organization presented the same primary documents.
In this regard, the court concluded that unspent funds for the needs of the organization and, in fact, unreturned accountable funds remaining at the disposal of the general director are his personal income.
Consequently, this money is subject to inclusion in the tax base for personal income tax, and is also subject to insurance premiums and is subject to inclusion in the base for their calculation.
Therefore, the court concluded, the Federal Tax Service justifiably demanded that the organization withhold and contribute to the budget previously unpaid personal income tax amounts.
Supporting documents must be attached to the costs.
If the employee still has a debt, then the organization’s main counterargument is the ability to collect it. But if a company has already accepted an unconfirmed advance report from an employee and written off his debt, it should operate with the reality of costs. For example, the results of work, services or purchased goods. If the company paid the debt to the counterparty through an accountant, it is necessary to present acts of reconciliation with this counterparty.
In one of the legal proceedings, the organization accepted goods without documents for accounting. The employees attached to the advance reports acts of the working commission, certificates and reports, as well as orders from the director of the company for each of the accountable persons. The company considered that the individual accounted for the money. But the tax authorities did not agree with this, included these amounts in the income of employees and imposed contributions on it. The court sided with the company. He pointed out that the tax authorities did not provide evidence that the society received materials, goods, works and services free of charge. Consequently, the company paid for them, and the accountable money cannot be considered income of individuals (Resolution of the Autonomous District of the Ural District dated November 11, 2015 No. F09-7999/15). However, so far this is only one case in favor of the company, so it is not a fact that the tax authorities will also lose next time.
How to withhold money from your salary
The maximum amount of deduction for each salary payment is 20% minus personal income tax (Article 138 of the Labor Code of the Russian Federation). If the unrefunded amount is larger, then it will have to be deducted in several stages (months).
Example
Secretary of Mirage LLC Ivanova N.N. On August 3, 2021, she took an account of 5,000 rubles for the purchase of paper for a period of 1 day. You must report within 3 days from the expiration date - until August 6 inclusive. The girl finished on time, submitted the advance report and receipts for the purchase of paper. It turned out that she spent not 5,000, but only 2,000 rubles. She did not return the remaining 3,000, but agreed to withhold it.
Ivanova’s salary for August is 25,000 rubles. This means you can take from her this month: (25,000 - 25,000 x 13%) x 20% = 4,350 rubles. But the employee’s debt is less than this amount - only 3,000. This means that the accountant will withhold it in full from the salary for August 2021.
To deduct the unrefunded amount from the employee’s salary, you need to draw up a withholding order. It is drawn up randomly and signed by the manager. This must be done no later than a month from the expiration date for the return of the accountable amount (Article 137 of the Labor Code of the Russian Federation). If time is lost, the money will have to be returned through the courts.
Errors in advance reports may result in additional charges
In one of the cases, the court found that the tax authorities were right, since the primary documents that the company attached to the expense report did not contain the position, surname, first name and patronymic of the person who signed them. The sales receipts did not contain the names of the goods, but only general phrases: “household expenses” or “office supplies.” There were also no dates for drawing up the documents, the columns “quantity” and “price of goods” were not filled in, there was no seller’s signature. In this case, the accountable amounts can be considered the employee’s income. This is what the Supreme Court of the Russian Federation considered in its ruling dated 03/09/16 No. 302-KG16-450. The AC of the North Caucasus District came to the same conclusion in its resolution dated May 23, 2016 No. F08-2743/2016.
In another case, the director of the company received 4.7 million rubles on account, and confirmed the expenses with contracts with individuals. They were interrogated, it turned out that the individuals had never sold materials to the company and did not receive any money from it other than salaries. In addition, the goods that were specified in the sales contracts were neither written off nor leftover materials. The court sided with the tax authorities and supported additional assessments (resolution of the Federal Antimonopoly Service of the East Siberian District dated January 24, 2014 No. A19-2278/2013).
Another example is that employees attached checks from organizations that did not have registered cash registers to the advance report. As a result, controllers included the accountable money in the income of individuals. The court supported them (resolution of the Administrative Court of the North Caucasus District dated July 7, 2015 No. F08-3967/2015).
On the issue of the reliability of the financial report
Of interest to tax agents is Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated 02/03/2009 N 11714/08, which considers the following situation: the tax authority, during an audit, assessed additional personal income tax in relation to accountable amounts for which individuals reported with unreliable, in its opinion, documents. The Presidium of the Supreme Arbitration Court noted that the reliability of the documents submitted by employees confirming the expenses incurred is determined by the company itself (that is, the tax agent). Employees' advance reports have been accepted, purchased inventory items using accountable funds have been capitalized in the prescribed manner. The tax inspectorate, in turn, did not provide evidence that the disputed amounts were the economic benefit of the employees (a similar conclusion is contained in the resolution of the Federal Antimonopoly Service UO dated December 23, 2009 N F09-456/09-C2). At the same time, the conclusions of the lower courts that the cost of goods and materials acquired by individuals cannot be attributed to expenses associated with production and sales are not relevant to the procedure for calculating personal income tax.
Note: erroneous attribution of travel expenses to account 70 instead of account 71 is not a legal basis for their inclusion in the subject of personal income tax (Resolution of the Federal Antimonopoly Service of the Moscow Region dated November 15, 2007 N KA-A40/11717-07).
FAS MO (resolution dated June 24, 2009 N KA-A40/4694-09), considering the case regarding the recognition of employee income as amounts issued on account and withholding personal income tax from them on the basis of their failure to confirm the authenticity of the expenditure of money due to improper preparation of advance reports established that the employees acted on behalf of the company, the funds issued on account were the property of the applicant and were issued to him for business expenses, while there was no change in the owner of the accountable amounts. The tax inspectorate did not provide evidence that the disputed amounts were the economic benefit of the employees, due to which the courts came to the conclusion that it was unlawful to recognize the disputed amounts as the income of employees and withhold personal income tax from them (the above legal positions are enshrined in the ruling of the Supreme Arbitration Court of the Russian Federation dated January 14, 2008 N VAS- 15318/08).
It should also be noted that accountable amounts not returned in a timely manner (debt on advances issued) cannot be qualified as issued to individuals under loan agreements (Chapter 42 of the Civil Code of the Russian Federation), since they have a different legal nature, and accordingly, material benefits, which are determined according to the rules subparagraph 1 of paragraph 1 of Article 212 of the Tax Code of the Russian Federation is not calculated.
The regularity of payments will prove their salary nature
If employees have not yet reported on the previous amounts, the procedure for maintaining the cash register prohibits issuing new amounts to them for reporting. But many companies do not pay attention to this ban. In one of the cases, an individual entrepreneur transferred money monthly to the cards of his employees for several years. The purpose of payment indicated “for economic needs.” However, the employees did not report, did not return the balance, and the individual entrepreneur did not try to get his money back. When the tax authorities checked the individual entrepreneur, the statute of limitations for payments for 2010 and the first half of 2011 had already passed. As a result, the court sided with the inspectors and recognized all such amounts as income for individuals, regardless of whether the statute of limitations had passed or not (Resolution of the Administrative Court of the North-Western District dated April 21, 2016 No. F07-957/2016).
If payments of accountable amounts are made regularly, it will be similar to a salary. Especially if these amounts correspond to the level of wages. Sometimes an organization pays an employee a low salary, and gives the difference in the form of accountable funds. In this case, fiscal officials can draw a conclusion about the salary nature of the payments.
