Tax proceedings

The taxpayer has a number of obligations towards the tax office that are subject to control. The official checks how and whether the taxpayer complies with them. After carrying out the checking activities, a summary report is drawn up. Sometimes, as a result of the verification, tax proceedings may be initiated.

For what purpose are tax proceedings initiated?

The main and most important objective of tax proceedings is to resolve the case (the actual state) through the tax assessment and the reconstruction of past facts relevant to the existence of the tax liability relationship.

Initiation of tax proceedings

The issue of initiating tax proceedings has been regulated in the Tax Ordinance. After the inspection, the procedure is generally initiated ex officio. According to Art. 165 par. 4, the date of delivery to the party of the decision to initiate the procedure.

This procedure is usually undertaken when the auditor detects irregularities in the fulfillment of obligations under tax law. Importantly, tax proceedings may be initiated up to 6 months from the end of the inspection, and the end of the inspection should be understood as the date of receipt of the report by the taxpayer.

How to avoid initiating tax proceedings?

The taxpayer may avoid initiating the procedure if he submits a declaration or makes a correction to the declaration which fully takes into account the irregularities revealed during the inspection. This position results from the content of the Ordinance: “Art. 165b. § 1. In the event of disclosure by the tax inspection of irregularities as to the compliance by the inspected party with the obligations arising from the provisions of tax law and the taxpayer's failure to submit a declaration or failure to correct the declaration in its entirety, taking into account the disclosed irregularities, the tax authority shall initiate tax proceedings in the case that was subject to tax inspection, no later than within 6 months from the end of the inspection. "

However, if the taxpayer, after the end of the inspection, submits a declaration or a correction of the declaration and does not take into account all the irregularities indicated in the protocol received, he still has to take into account that proceedings may be initiated in his case.

The inspected person may also submit explanations or objections to the protocol, which - if fully accepted by the inspecting authority - also mean that the proceedings will not be initiated.

Late initiation of tax proceedings

Tax proceedings initiated after 6 months from the end of the inspection shall result in the invalidity of the tax decision issued in such proceedings.

The taxpayer should know that the tax regulations, after all, provide for only two situations in which the proceedings may be initiated despite the expiry of the statutory period of 6 months. The regulation of this issue has been included in par. 3 Art. 165b of the Tax Code and in accordance with its content, tax proceedings may also be initiated 6 months after the end of the tax audit, if:

1. the taxpayer will correct the declaration again, in which the irregularities revealed in the tax audit will not be taken into account,

2. the tax authority will receive information from the tax authorities or other authorities justifying the initiation of tax proceedings.