Tax Service Sends Mass Letters to Individual Entrepreneurs Demanding Income Reports

Lawyer Analyzes Tax Service Letters

According to ХВИЛЯ: Attorney Bohdan Yankiv reviewed over ten actual letters sent by the State Tax Service (STS) to individual entrepreneurs (FOPs) and private individuals. According to him, these letters are informational requests, not audits, and are based on Article 73 of the Tax Code and Cabinet Resolution No. 1245 of December 27, 2010. Ignoring such a letter can result in a fine.

The tax authority is actively dispatching letters to FOPs and individuals, asking about their income, sales, and unpaid taxes. These letters may arrive by mail or through the taxpayer’s electronic account. They typically bear the signature of the STS head or deputy head along with an official seal. Yankiv notes that the lists of documents requested are recommendations, not mandatory requirements.

Strategies for Responding to Inquiries

When replying to a received request, entrepreneurs can choose one of three approaches:

• provide all requested information;
• share only the portion that does not contain compromising data;
• or submit nothing and instead respond with a letter of explanation.

Yankiv also pointed out that in 99% of cases, responding to a query about foreign income-especially from companies like Interactive Brokers and Schwab-resolves the issue. However, he warns that an audit can still be ordered even after a reply, though this happens in no more than 10% of cases.

The types of letters sent by the tax service can be grouped into several categories: mass informational mailings, requests about foreign income, inquiries about sales without FOP registration, requests based on 4DF reports, demands to register as a VAT payer, and summonses to receive an audit order. For example, one letter mentioned 44 sold items totaling UAH 30,600, which could raise questions from tax authorities.

'Forewarned is forearmed,' says attorney Bohdan Yankiv, emphasizing the importance of timely responses to tax service requests.

Given the State Tax Service’s heightened activity in sending informational requests, it is crucial for entrepreneurs to understand their rights and obligations. Responding to such a request can be a key step in avoiding further inspections or fines. A prompt reaction and proper documentation can greatly ease communication with tax authorities and reduce business risks.

As the tax authority intensifies its efforts, understanding the updated criteria for audits becomes crucial for entrepreneurs. These new guidelines could impact how individual entrepreneurs prepare for potential inquiries from the State Tax Service, emphasizing the importance of being informed and proactive in managing tax obligations.