How to check your taxes and tax debt

What «checking your taxes» means

Behind this request are three different tasks: finding out how much has been assessed for a period; understanding whether there is any unpaid debt; and checking whether a payment has arrived and been allocated correctly. The answers are in different sections of the personal account: assessments based on returns, the ledger account for each tax, and payment documents.

Look at each tax separately rather than at the total: penalty interest is charged on a specific unpaid amount of tax (Article 110).

A counterparty's debt: what is public by law

Taxpayer information is a tax secret, but Article 29 of the Tax Code expressly excludes from it the TIN, information on tax law violations and penalties, the tax regime and VAT payer status, the amounts of taxes paid and tax debt, participants, average headcount, and income and expenses according to the financial statements.

Before a large transaction or prepayment, it is worth checking whether the counterparty has tax debt: if it is not paid, the tax authority first debits money from the accounts and then levies execution on property (Articles 119–121), which may derail performance of the contract.

Why personal account data and the books differ

If every line of the discrepancy can be explained, all is well. If not, a reconciliation of settlements with the tax authority is needed.

• a payment was sent with incorrect details and allocated to another tax or period;
• an amended return was filed and assessments were recalculated;
• an amount from an audit was recorded by only one side;
• an overpayment was offset against another tax;
• in the books the tax is accrued on an accrual basis, while in the personal account it follows the return and actual payment.

Penalty interest: how it is calculated

Penalty interest is the amount a taxpayer pays for breaching the tax payment deadline, in addition to the tax itself and regardless of fines (Article 110). It accrues for each calendar day of delay, starting from the day after the payment date, as a percentage of the unpaid amount. The daily rate is 1/300 of the Central Bank refinancing rate in effect during that period.

An application for deferral or instalments does not stop penalty interest from accruing. Penalty interest is not charged while account operations are suspended or funds are frozen by decision of the tax authority, nor on debt that arose from following written clarifications of the finance or tax authority (Article 110).

Demand to pay tax debt

A demand is a notice of outstanding debt and of the obligation to pay it by a deadline (Article 116). It is sent by the tax authority at the place of registration no later than three business days after the debt is identified or after an audit decision takes effect (Article 117). The demand states the amount of tax, penalty interest as at the date of sending, fines and the measures that will be applied in case of non-compliance (Article 116).

If circumstances change, the tax authority must send a revised demand or withdraw the previous one within three days; partial repayment does not count as such a change (Article 118).

What happens if you do not pay

If the demand is not met, the debt is collected: from a legal entity or individual entrepreneur — first from money in bank accounts and, if that is insufficient, from other property (Article 120). If the debt is not paid within sixty calendar days of receiving the demand and debiting the accounts did not cover it, the tax authority levies execution on property (Article 119). Debt of an individual who is not an entrepreneur is collected under Article 125.

If revenue was paid into other persons' accounts, or if money or property was transferred to other persons after the company learned of the audit, the tax authority may collect the debt from those persons (Article 120).