Explanatory note to the updated tax return(s) submitted in connection with the identification of facts of conducting financial and economic activities with

When to Provide Explanations

When conducting an inspection, the inspector has the right to request written explanations. Situations in which taxpayers are required to explain the result of control are spelled out in paragraph 3 of Art. 88 Tax Code of the Russian Federation:

Errors in submitted reports. For example, inaccuracies or inconsistencies are identified in the declaration. In this case, tax authorities require you to provide justification for these discrepancies or send a corrective report.
In the adjusting statements, the amounts payable to the budget are significantly lower than in the initial calculations. In such a situation, the inspector will suspect a deliberate understatement of the tax base and payments and will demand an explanation for the changes.
The submitted income tax return reflects losses. In any case, you will have to justify unprofitable activities to the Federal Tax Service, so prepare a letter with explanations in advance.

The inspection request must be responded to within 5 working days from the date of official delivery of the request - such norms are enshrined in clause 3 of Art. 88, paragraph 6 of Art. 6.1 Tax Code of the Russian Federation. In special cases, the Federal Tax Service will have to notify the receipt of a tax request (letter of the Federal Tax Service of the Russian Federation dated January 27, 2015 No. ED-4-15/1071).

IMPORTANT!

Some requests from the Federal Tax Service do not have a stamp. You will still have to respond to such demands - such instructions are given in the letter of the Federal Tax Service of the Russian Federation dated July 15, 2015 No. ED-3-2 / [email protected]

Explanatory note on losses

When tax authorities require an explanation of a loss in a declaration, it is necessary to justify the reason for its occurrence. Therefore, it is necessary to provide documentary evidence of income and expenses, explain how the calculation took place, and also justify the occurrence of this loss. Extracts from accounting registers, contracts with suppliers, contracts with clients, etc. are suitable for documentary evidence.

The more carefully you prepare your explanation, the fewer additional questions the tax office will have.

How to compose

The general procedure for writing a letter to the tax office for clarification is as follows:

We compose a response on the organization’s letterhead. If there is no such form, in the header of the document we indicate the full name of the institution, INN, KPP, OGRN and address.
We indicate the number and date of the requirement for which the explanation is being drawn up. It is permissible to write a response to several tax requests at once.
If there are errors or inconsistencies in the report, double-check the report to eliminate typos or typos.
In the descriptive part of the response letter, we reveal in detail and consistently the circumstances of the situation that needs to be explained.
When answering a request, rely on the facts and document the circumstances. Attach copies of documents to the answer, if any. For example, a copy of the additional agreement to the contract with the condition for increasing prices.

If the inspector requires an explanatory note regarding inconsistencies in the value added tax return, the response will have to be sent electronically. Exceptions to the rules are reserved for organizations that report VAT on paper. If the institution reported electronically, but provided a response to the request on paper, then the tax office will consider such explanations not provided. Such norms are prescribed in the letter of the Federal Tax Service dated January 27, 2017 No. ED-4-15/1443.

ConsultantPlus experts examined whether it is necessary to submit an explanatory note with accounting reports. Use these instructions for free.

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Form and ready-made samples for different situations

The covering letter contains a list of the materials sent and explanations for them. These additions greatly facilitate interactions between tax authorities and taxpayers.

If there is a written listing of the submitted documents, the risk of additional questions from the inspectorate regarding the completeness of the reporting provided is minimized. The second reason why it is worth attaching an explanatory note to reporting to the inspectorate is to simplify the registration of incoming correspondence.

Note! The tax authorities will not ask the taxpayer for the purpose of filing a return (for example, an updated one) if a letter is attached with the reason for sending the documents.

A cover letter has no meaning, but its presence:

is a confirmation of the fact of sending;
contains a list of attached documents and instructions for handling them;
allows you to determine the deadline due to the specified departure times.

There is no statutory form for writing a cover letter, but there are rules for its composition that have been developed in practice. The annex to the reporting before the inspection must include:

name of the tax office (if necessary, indicate the full name of the employee to whom the documents are sent);
name of the tax organization and address of the sender;
number and date of the request in response to which an explanation is sent;
contacting an employee or tax authority;
a list of documents and other materials indicating the number of sheets and copies;
Full name and position of the sender, his signature and contact information (phone number, email).

It can be completed either on paper, written by hand, or electronically, printed on a computer. At the same time, if the explanation is sent by regular mail, then it must be sent by registered mail with return receipt requested, then the risk that the letter will be lost will be minimized.

The use of an electronic format is possible only if the organization has an electronic digital signature.

Any additional documents may be attached to the explanation; their presence must be reflected in the content of the response.

As mentioned above, there is no unified response form for giving tax explanations, so you can compose it in any form. It is worth noting that the form of the response must be extremely correct and standard in terms of the rules for preparing such papers.

First, on the left or right (it doesn’t matter) you need to indicate the addressee, i.e. exactly the tax office where the response is sent. Here you need to enter its number, as well as the region and locality to which it belongs.
Next, the sender of the letter is indicated: the name of the company, its address (actual), as well as the telephone number (in case the tax inspector has any additional questions for clarification) is written.
Further in the answer you should refer to the request number (and the tax service always assigns numbers to such documents), and its date (note: not the date of receipt, but the date of preparation), and also briefly outline the essence of the question.
After this, you can proceed directly to giving explanations.
They should be written in as much detail as possible, with all the necessary links to documents, laws, regulations, etc. The more carefully this part of the answer is prepared, the greater the chance that the tax office will be satisfied with it. In no case should you give unreliable or deliberately false information in your answer - they will be quickly detected and then immediate sanctions from the tax authorities will follow.
After the explanation is given, it is necessary to certify the letter with the signature of the chief accountant (if necessary), as well as the head of the company (required).

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A nil return has the same form as a regular simplified return; no special form has been developed for filing nil results. The differences between a zero and a regular declaration under the simplified tax system are not in the form itself, but in the indicators entered into its fields.

For registration, you should use the form included in the appendix to the order of the tax authority dated February 26, 2016 No. MMV-7-3 / [email protected] That is, a new form has been prepared this year, the change of which is associated with the introduction of a trade tax and the opportunity for regional entities to reduce special tax rate.

When submitting zero indicators, organizations and individual entrepreneurs need to fill out the following pages:

Title – for all payers;
Section 1.1 and Section 3.2.1 – if the simplifier calculates the tax on the amount of income;
Section 1.2 and Section 2.2 – if the tax is calculated based on the difference in income and expense indicators.

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What happens if you don’t respond to the Federal Tax Service’s requirement?

No matter how much the inspectorate threatens punishment, tax officials cannot fine or issue an administrative penalty for the absence of an explanatory letter:

Article 126 of the Tax Code of the Russian Federation is not a basis for punishment, since the provision of explanations does not apply to the provision of documents (93 of the Tax Code of the Russian Federation);
Article 129.1 of the Tax Code of the Russian Federation is not applicable, since a request for written explanations is not a “counter check” (93.1 of the Tax Code of the Russian Federation);
Article 19.4 of the Code of Administrative Offenses is not an argument; punishment is applicable only in case of failure to appear at the territorial inspection.

Similar explanations are given in paragraph 2.3 of the letter of the Federal Tax Service of Russia dated July 17, 2013 No. AS-4-2/12837.

Procedure for compilation

In general, the procedure goes as follows:

After a desk audit has been carried out, the tax office sends a request in the form of a paper letter or email. The text indicates data that, in the opinion of the inspectorate, was compiled incorrectly, as well as discrepancies in the information contained in different documents.
Then the taxpayer is obliged to provide his explanations as soon as possible - up to 5 working days. This period begins on the working day following the day of receipt of the notification.
You can send it either by mail (registered mail), by courier, or electronically. Moreover, in the case of an email, it is important to verify it using an electronic digital signature. If it has not been created, the only option left is to send it in regular paper form. It is also important to know that it is often necessary to provide documents with explanations along with the application itself. Then the text of the letter must indicate the attachments: the name of the document, quantity and type (original or copy) are written down.

Errors and discrepancies regarding VAT

Value added tax is the fiscal liability where accountants make the most mistakes. As a result, discrepancies and inaccuracies in reporting are inevitable.

The most common mistakes are when the amount of tax accrued is less than the amount of the tax deduction claimed for reimbursement. In fact, the reason for this discrepancy is the inattention of the person responsible for issuing invoices or a technical error when uploading data.

In the explanatory note, please include the following information: “We inform you that there are no errors in the purchase book, the data was entered correctly, timely and in full. This discrepancy occurred due to a technical error when generating invoice No.____ dated “___”______ 20___. Tax reporting has been adjusted (indicate the date the adjustments were sent).”

How to tell about your income: sample explanations for the tax office

In this article, you will learn how to take into account the personal money of an entrepreneur deposited into a current account, why, due to the loan received, the income will not match the amounts in the bank, and whether it is necessary to reflect the income if the money has not been received into the account.

If the income of an entrepreneur reflected in the tax base according to the simplified tax system or personal income tax differs from the amounts in the bank, the tax authorities will notice this and ask for an explanation. They must be submitted in writing. State the reason why you did not include all receipts into your current account as income. Or, on the contrary, they charged tax on a larger amount than was transferred to the account.

A unified form for such explanations has not been approved. You have the right to write to the tax authorities as you see fit. The main thing is to explain why the income from the declaration does not match the amount received by the bank. Next, we will tell you how to best compose an explanation.

Income is less than bank income

The first reason is that you deposited personal money into the account. As an individual entrepreneur, you have the right to contribute your own funds to the business at any time. And put them into a checking account.

The amount of personal money you deposited into the account does not need to be included in your income. And do not write it down in the Income and Expense Book. After all, when you contributed your own funds to the business, you did not receive any economic benefits.

In the explanatory note, indicate how much personal money you deposited in the bank during the reporting period. Write that you did not take this amount into account in taxable income on legal grounds. Attach to the explanatory note copies of bank receipts for cash received, indicating the source of receipt - the entrepreneur’s personal funds.

A sample explanatory note about discrepancies is given below.

The second reason is that you received borrowed funds. You do not include the amounts of loans and bank credits in taxable income. And you don’t write it down in the Accounting Book. Moreover, both under the general regime and under the simplified tax system (subclause 10, clause 1, article 251 and subclause 1, clause 1.1, article 346.15 of the Tax Code of the Russian Federation). So, indicate in the letter to the Federal Tax Service the amount of borrowed funds received during the tax period. And attach to the explanations

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Reporting discrepancies

Quite often there are situations when the same economic indicator has different values in the provided fiscal reporting forms. Such discrepancies are caused by the fact that for each tax, fee, contribution, individual rules for determining the taxable base are established. And if tax authorities require clarification on this issue, provide clarification in free form. In the text, indicate specific reasons why the discrepancies arose.

Also, the reason for this inconsistency is the different norms and rules of tax accounting in relation to a number of specific situations. Write down the circumstances in a letter.

It is welcome to provide explanations with references to the norms of the current fiscal legislation. Even if the company is wrong (incorrectly interpreted the norms of the Tax Code of the Russian Federation), the Federal Tax Service will provide detailed explanations, which will help avoid larger mistakes and fines in future activities.

Types: ready-made examples for common situations

In practice, there are several common cases when tax authorities present a requirement to provide a response (based on a company model) explaining their position on a particular topic. Ready-made solutions are discussed below.

The inspectorate acquired the right to demand explanations from the company on this matter relatively recently – since 2014, which is quite legal. However, in practice, there are often cases where representatives of inspection bodies essentially abuse their rights and ask for clarification regarding such cases:

the asset was sold, but losses were incurred only due to actual depreciation (depreciation), which is why it was necessary to sell the asset at a lower price;
the asset was sold at a price higher than its residual value - such cases often arise for purely market reasons due to an unstable economic situation.

In these cases, the company is not required to provide any explanation. However, in the response letter it can be stated that profit was declared in the reporting documents, and the organization did not provide any factual errors or deliberately false information.

Since in 2015 taxes are not paid on all movable property assets (except for those belonging to depreciation groups 1 and 2) (provided that the company purchased them after January 1, 2013), the law essentially approved the benefit. Such preferential property is already designated in the Tax Code (Article 381).

However, many representatives of the inspection (perhaps out of ignorance) began to demand documents that confirm the possibility of receiving this benefit, as well as a complete list of all movable objects that are exempt.

It is important to keep 2 points in mind here:

The letter must contain a specific list of the assets in question. Otherwise, you can only send copies of contracts and other documents that confirm the fact of purchase and the date of its completion. The contracts also reflect the type of selling company: dependent or independent, which has its own meaning.
If the assets were purchased from an affiliated company (as well as in cases where the objects were acquired as a result of the reorganization of the company), then taxes on such property are paid.

And here is what a sample response to such requirements looks like when it comes to providing explanations on preferential property.

Of course, all property objects of their 1st and 2nd depreciation groups are not included in this list. There are no benefits for them, and besides, representatives of the tax service do not have the right to demand clarification specifically on these things.

Representatives of the tax inspectorate often become interested in cases where in one financial year the actually paid property tax decreased, and in the next it remained at approximately the same level (i.e. did not increase). The attention of inspectors is especially often drawn to situations where the differences between these values are too large (in their opinion), since this may indicate an illegal financial scheme aimed at non-payment.

In addition, 3-4 years ago there were precedents when interdependent organizations deliberately simply transferred some of the movable property assets into each other’s ownership in order to significantly reduce the payment amount. Since in 2015 the tax is paid from such a base, and the company’s tax has not actually increased, it means, logically, that it is deliberately evading payment.

The answer is provided according to the actual situation. The most often influenced by objective factors:

liquidation of certain property assets due to optimization and/or unfavorable economic situation;
sale of property;
disposal of fixed assets.

The company then simply acquires property from a firm with which it is not interdependent. It is this reason that plays the main role. To prove their position, they send purchase and sale agreements and financial documents confirming such a legal scheme.

In such cases, suspicion arises because property is depreciated, but property taxes are not paid. Inspectors may again suspect some illegal activity. However, in practice, the reason is most often easily explained and provable. The fact is that a fairly large share of the company’s assets is property that belongs to depreciation groups 1 and 2, and no tax is paid on it. An example response for this case is provided below.

Tax authorities often demand explanations due to the fact that expenses, in their opinion, are growing too quickly and make up a fairly large percentage of the company’s budget. Practice shows that suspicion is raised in cases where the profit is only a fifth or less. It is very simple to explain the increase in costs, especially against the backdrop of real economic reasons:

instability in the foreign exchange market (exchange rate differences);
the need to increase wages due to the actually decreased incomes of the population over the past 3 years in a row;
rising costs due to inflation.

An example version is presented below.

Reducing the tax burden

This issue is of particular interest to tax authorities. Thus, representatives of the Federal Tax Service constantly monitor the volume of revenues to the state budget. If they decrease, the reaction is immediate: demands with explanations, an invitation from the manager to a personal meeting with a representative of the Federal Tax Service, or an on-site desk audit (a last resort).

In such a situation, you cannot hesitate; you must immediately provide explanations to the Federal Tax Service. In your response letter, describe all the circumstances and facts that influenced the reduction in tax payments. Confirm the facts with documents or provide economic justification. Otherwise, the Federal Tax Service will initiate an on-site inspection, which will take several months.

What to write in an explanatory note:

Reduction of salary taxes. Reasons: staff reduction, enterprise restructuring, reduction in wages.
A decrease in profits usually occurs due to the termination of contracts with customers. A copy of the additional agreement on termination of the contract should be attached to the written explanations.
Increased costs as a result of decreased profits. Justification: expansion of activities (increase in production volumes, opening of a new branch, division, outlet), change of suppliers or increase in prices for inventories and raw materials (attach copies of contracts).

There are many reasons for reducing the tax burden. It is necessary to understand each specific case in detail.

Actions of the taxpayer upon receipt of requests for clarification from the Federal Tax Service

Inspectors will learn that a company or individual entrepreneur calculates insurance premiums at reduced rates from the Calculation of Insurance Premiums, so in their request they will ask for documents confirming the policyholder’s right to apply preferential rates. The list of documents depends on the applied taxation system and type of activity.

Documents can be requested both in paper form (in the form of certified copies) and in electronic form. Explanations must contain a link to the article of the Tax Code of the Russian Federation on the basis of which reduced tariffs are applied, the type of activity of the company or individual entrepreneur and other information that is of interest to tax authorities. Supporting documents must be submitted as an appendix to the explanations.

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The absence of accruals and payment of insurance premiums in the calculation is also a reason to request clarification.

Calculation of insurance premiums is submitted by all policyholders, regardless of whether they carried out activities during the reporting period or not. If data on the calculation and payment of contributions is missing, the reason for this must be explained. For example, indicate that during the reporting period, the LLC or individual entrepreneur did not conduct any activities, and therefore did not pay salaries to employees, or that the company has no employees, but only the manager, who is also its sole founder.

To prevent questions, it is better to submit such explanations to the tax office regarding the payment of insurance premiums immediately, attaching them to the “zero” Calculation.

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Inspectors of the Federal Tax Service are ordinary people who act in accordance with the regulations entrusted to them when conducting desk processing of incoming data from taxpayers. They may have questions in the following cases:

Due to the fact that the declaration is only a confirmation of the events that occurred in the life of the taxpayer during the reporting period in terms of his receipt of one or another type of one-time or periodic income, most often the tax authorities have their own information regarding the individual, obtained from various competent sources.

Over the course of 90 days of a desk audit, this information is verified with the information presented in the report, which does not always coincide with each other. If such inconsistencies are discovered, inspectors will immediately send a letter demanding explanations regarding the discrepancies that have arisen.

In all cases, the taxpayer must accept the request for consideration, determine for himself the nature of the issues raised, draw up his action plan and provide an adjusted version of the package of documents, which may contain:

Corrected declaration 3-NDFL under the number of the corresponding adjustment at the top of the title page of the document.
Supplemented supporting documentation in the form of a certificate of income in form 2-NDFL, contracts for the sale of registered movable or immovable property with profit and the tax base formed as a result of these actions. This also includes missing papers confirming the person’s expenses for treatment, education or residential real estate, which are proven by checks, cash orders or documents confirming payments on a mortgage or other targeted loan. Legal entities in this case should pay special attention to income tax and VAT with the formation of an evidence base.

Persons reporting under the simplified system must provide documentation of advance income tax for each quarter, otherwise, the simplified person risks being transferred to a full-fledged taxation system

The response to the request for clarification on property tax must be completed with certificates of ownership and cadastral documents for the property submitted for reporting. If a person belongs to the category of those applying for benefits, this must also be indicated in the explanations.

Covering letter with explanations according to the form established at the level of tax legislation.

These documents are drawn up in a single set and submitted together with an explanatory note for re-inspection to the tax authority.

Tax deduction

If neither after 5 nor after 15 working days the inspection receives a letter of explanation from an individual, individual entrepreneur or legal entity, the following penalties may be applied to him:

Imposition of a fine in the amount of 5,000 rubles if this situation occurred for the first time in the history of relations with the taxpayer.
Penalties in the amount of 20,000 rubles when a person has been repeatedly found to have failed to comply with the legal requirements of the Federal Tax Service inspection.
In the event of a total lack of any reaction on the part of the taxpayer, including failure to pay a fine, the inspectorate reserves the right to apply to the judicial authorities with a statement against the person and oblige him to fulfill all requirements through a court decision.

Important! If a request comes from the tax office, and the taxpayer accepts it, then he is obliged, even if not in compliance with all regulatory deadlines, to respond to it.

Simplified taxation system

Only legal entities can be subject to these types of penalties. This is due to the fact that when a company is self-supporting, it must involve professionals in tax matters, and in the case of a citizen, this is not at all necessary, since he has a completely different interest, and providing documents to the tax office is only a one-time need for him.

In conclusion, it should be said that when starting relationships and document flow with the tax authorities, it is better to complete all questions and provide the necessary explanations, especially considering that they are mostly legal and justified. This will further save the taxpayer from many troubles with the bureaucratic machine of our state.

Often, controllers compare the amounts of income and expenses according to accounting data with similar indicators in the income tax return. And if they do not match, then they ask for clarification.

The inspector will also not miss the fact that the amount of income in the income tax return differs from the amount of revenue in the VAT report. And all because many controllers believe that these indicators in both declarations should be identical.

But it is not so. Not all income that forms the income tax base is included in the revenue for calculating VAT. After all, there are operations on which you have to pay income tax, but at the same time you don’t have to calculate VAT. An example of this is positive amount differences (clause 4 of article 153, clause 11.1 of article 250 of the Tax Code of the Russian Federation). Their amount is included in non-operating income. But at the same time, they do not affect the VAT base in any way.

It also happens the other way around: there are transactions subject to VAT that are not taken into account when calculating income tax. By the way, these include the gratuitous transfer of goods. Let's show it with an example.

Based on the results of a tax or reporting period, a company may receive not only a profit, but also a loss. After all, an organization’s income does not always exceed its expenses. At first glance, the situation is normal. However, as soon as you show a loss in your declaration, the tax authorities will demand clarification.

Our advice to you: attach an explanatory letter to the loss-making declaration immediately, without waiting for a request. After all, a negative tax base can cast doubt on the company’s reliability in the eyes of controllers. And regular losses may even lead to an on-site inspection (clause 2 of the Publicly Available Criteria, approved by order of the Federal Tax Service of Russia dated May 30, 2007 No. MM-3-06 / [email protected] ). We have clearly shown below what a letter explaining the reasons for the loss might look like.

If the deterioration in indicators was not reflected in the previous statements, but losses immediately began in this one, then it all looks very controversial and suspicious. In this case, in response to the tax demand, it is necessary to explain the following:

reveal the dynamics of the requested accounting item, that is, clearly show in figures what led to the loss.
Give a brief written explanation of the reasons for what happened.

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Do tax authorities have the right to demand explanations for losses from previous years{q} Expert opinion

Of course, they may be different for each company and in each individual industry, but the following can be considered the main ones:

reduction in production or sales due to the crisis, unstable market and economic situation;
a fall in demand for products and, as a consequence, a forced reduction in prices;
a large exchange rate difference, that is, an increase in costs due to the depreciation of the ruble against foreign currencies;
large expenses (repairs, redesign, purchase of equipment, long-term investments, etc.).