24.08.06

After successfully exposing an enterprise that was paying its associates "under the table," the tax bodies now have a methodical reference for exposing still more companies.

The Federal Tax Service issued a letter outlining practical advice for its inspections using the model of the Udmurt tax inspectors’ experience in fighting "grey" wages. The FTS called the evidence gathered and presented by the Udmurt tax collectors "exemplary:" although it was circumstantial, it was easily gathered and is persuasive. The court decisions for three instances were enclosed as part of the document and marked, "For analysis and application in work (for tax inspectors)."

Thus, the fact of the matter lies in the following:

Based on the interrogation of 11 associates in a commercial firm (with a staff of about 100 people), tax collectors came to the conclusion that the enterprise was conducting double-entry bookkeeping: the questioned people admitted to signing their names on two pay sheets. The police then seized two cabinets out of the office containing the real pay sheets. According to the calculations of tax collectors, wages were underestimated 2.6-3.43 times: the official salary of an inventory-keeper was 3486 rubles, while that of a director was not quite 2669 rubles. They calculated that the firm was using an illegal tax agent and taxpayer; based on the overall results of the examination in November 2004, the inter-district IFTS calculated the company’s personal income tax at 580,000 rubles and the Unified Social Tax at 2.35 million rubles. They also calculated penalty fees at more than 1 million rubles and fines of 585,000 rubles.

The commercial firm appealed to the court stating that the inspectors questioned only 10% of its associates, and that the seized cabinets belonged to a private person. The inspection’s findings, in their words, "were formed on conjecture and assumption," and official documents, particularly the labor contracts, were ignored.

However, inspectors corroborated the evidence with a multitude of circumstantial evidence; they inquired at the Udmurt Republic’s Committee for State Statistics for information about the standard wages from 2001-2003 in organizations conducting activities similar to the accused’s. Additionally, tax collectors determined that some employees were hired from other employment at a considerable loss in wages. In the opinion of the court, that "contradicts common sense." It was also determined that the company didn’t pay bonuses, give raises, or pay overtime for time worked during evenings, nights, or holidays. The Court of Arbitration of the Udmurt Republic and the of the Ural Circuit Federal Court of Arbitration ruled that the inspectors’ case was the more convincing. The courts agreed that with unpaid accounts having been marked, the legal code gives tax collectors the right to determine the amount of taxes "with calculations based on the data of equivalent taxpayers." Though the company itself does not pay income taxes, the courts decided that this policy can be applied to the tax agents.

Although the tax legislation of the Russian Federation does provide for such an application, the given precedent may be very helpful to tax collectors in other hunts for unprincipled employers.

Source: From materials oringinally pubished in Vedimosti