It may have been five years and the taxpayer thinks he's done with it. IRS. But it's not always like that. Under certain conditions, the IRS can reopen the file and even go back ten years, seeking taxes and additional charges. The «key» is if after the first five years real new data that were not and could not be known in time to the competent tax authority.
The limits between five and ten years limitation clears his decision Council of State, on the occasion of a case of counterfeit and virtual invoices. The Second Section of the CTE rejected the request to appeal to a joint-operative hydraulic plant company, to which an income tax had been charged for the 2005 use due to the receipt and registration of virtual and counterfeit tax data.
The substance of the decision lies in what can be considered «additional information». It is not enough for any information to appear after five years, nor is it enough for an audit report alone because it was simply drafted later. It should be evidence revealing new data on the tax case and which were not known or could have been detected in time by the competent tax authority.
In this case, the company argued that the right of Public It was already out of order. Its argument was that the various tax administration services constitute a single set and that information on the transactions in question already existed in tax services within the original five years. Therefore, according to the company, they could not appear later as new «additional information» and extend the limitation to the decade.
The STC, however, did not accept the argument. The Commission therefore concludes that the measure was compatible with the internal market. The report was forwarded to the competent DOU and was the trigger for cross-checking the company's transactions.
Another point of the decision is of particular importance. The CPU accepts that findings of the DUI audit responsible for the issuer of virtual tax data may constitute additional data for the control of the recipient, even when the issuer’s audit had started within the original five years. What counts is when evidence of the virtuality of the transaction was obtained and not just when the control process began.
In the category of supplementary data, official or informal books and third-party data, documents of another DPO or other public service, and audit findings from which data on virtual invoices, inaccurate books or withholding taxable income arise.
This case shows in practice how the 10-year limitation can work. The company had started operations at the beginning of 1988 and, following audits of tax services in third companies, it was found that in the 2005 use it had received and registered in its books a total of 11 virtual and counterfeit tax data from three different companies.
In particular, they were registered as:
5 tax data at a total value of EUR 52,038, plus VAT EUR 9,787,84,
3 tax data at a total value of EUR 20,405, plus VAT EUR 3,876,90,
3 tax data at a total value of EUR 20,304, plus VAT EUR 3,857,70.
In total, i.e. 11 documents of a net value of EUR 92,747, plus VAT.
Following the findings of the audit, the company's books were found inaccurate and objectively impossible to check accounting. Gross and net income extrapolatively identified and the main tax was charged, along with additional tax due to inaccuracy at 120%.
The company appealed to the tax courts in 2015, showing, inter alia, that the infringements had been set aside, since by the time the accounting acts had been issued, the intended five years had passed. It also argued that information from IDOE, tax services and other authorities could not be classified as new elements, since all services were part of the same wider tax mechanism.
The case finally reached the Council of State, which rejected the appeal and considered that the longer limitation period could be applied in this case.
For taxpayers, however, the decision does not mean that any case can automatically remain open for ten years. The basic rule remains the five-year limitation. In order to extend the control time, it is necessary to ensure that Legal conditions and indeed additional evidence has emerged justifying the opening of the case beyond the initial five years.
