Saturday, 15 January, 2022

These 7 little mistakes that can cost you a tax audit

Income declared by taxpayers is deemed to be correct… until proven otherwise. To make sure of this, the tax authorities simply compare our declarations and the information transmitted by what it calls the “paying parties”, and in the first place the employers. Since the implementation of the pre-filled declaration, the tax authorities thus receive 250 million data items, which cover, according to the deputy Valérie Rabault, “more than three quarters of the useful information”. So there is little to be gleaned on this side. Suddenly, the administration dissects the appended declarations (property income in particular), inheritances and tax reductions, which cannot be cross-checked by “paying parties”. Detailed review of these elements that can trigger a tax audit.


The introduction of the withholding tax (PAS) in January gave rise to a future hotbed of recovery. For this first year of PAS, the taxation of current 2018 income is canceled by a tax credit, the CIMR. But not the exceptional income, which is taxed. The problem, analyzes Bernard Monassier, notary and vice-president of the Cercle des fiscalistes, “is that the texts are not very clear and that it is the taxpayers themselves who must sort out exceptional and current income”. Olivier Rozenfeld, president of Fidroit and trainer of tax specialists and bankers, also foresees “a lot of errors and interpretations. Even professionals are tearing their hair out, because this transitional period is simply a nightmare! In addition, some taxpayers may be tempted to disguise exceptional income as current income. The administration estimates, internally, that it will have to correct between 200,000 and 300,000 “optimized” declarations.


It is also a novelty for 2019. The development of Airbnb has pushed thousands of French people to transform themselves into hoteliers and many have failed to declare this income. In Paris, where the City Council has gone on a crusade against unregistered donors, more than 2 million euros in fines have been imposed on unscrupulous owners. They also received a notification of tax adjustment, which for some exceeded 30,000 euros. Some have also migrated to Leboncoin, which does not require prior registration …


It is an inexhaustible source of redress. In particular through the land deficit. This device makes it possible to deduct from its property income, then from its overall income, a large part of the maintenance costs of a property. The tax authorities tend to consider that, from a certain amount of work, the owner no longer does renovation (deductible) but reconstruction (non-deductible). “There are many tax cuts and tax credits in real estate which are grounds for adjustments, more because of their complexity than a real desire for fraud on the part of the beneficiary”, recognizes Vincent. Drezet, spokesperson for the Solidaires public finances union, who also indicates that these are businesses appreciated by the agents, because they “require little effort and that they are asked to make a figure”.


This device, which consists of financing equipment for an overseas company, allows an immediate tax reduction of about 20% of its stake. But it is a delicate arrangement, because the financier, in spite of the subscription of insurance, remains responsible for the good use of the material. “Better to go to a firm that has been doing this for a long time,” advises Fabrice de Longevialle, tax expert and editor of Comment Paid Less Taxes (Editions Eyrolles). To get started, you have to be white-blue on the rest of your statement, because that of the Girardin user will always be at the top of the pile … Tax exemption devices, complex operations sometimes offered by unscrupulous pharmacies, have always been a good source of redress. The investment in solar panel farms (canceled four years ago) has thus left a very bad memory, with more than 3,000 tax adjustments, of which several hundred are still in progress …


It is possible to put the securities of his company in his share savings plan (PEA). After five years, their capital gains are exempt from tax. Many start-up creators have placed securities of their company at convenience values ​​in their PEA. Which increase tenfold, even a hundredfold, when the company is sold a few years later. “Bercy is very upset against these practices and systematically attacks by wanting to tax 100% capital gains”, summarizes a lawyer who has already handled ten cases of this kind, “for several million euros in total”.

There is also a problem of capital gains for company directors who receive free shares. These capital gains are normally taxed on acquisition and then on disposal. But if the declarant or the company omits to declare the acquisition (which is often the case when the company is foreign and the beneficiary is then working outside France), the tax authorities will tax 100% of the capital gain, without allowance, with 40% increase and late payment interest. “The firm is currently defending a client who has received an adjustment of several hundred thousand euros,” confirms Steve Jakubowski, lawyer at Picovschi.


They trigger an automatic check: “This is what we call checks on event pieces,” explains Vincent Drezet. The registration of the inheritance transmission immediately leads to the search for declarative inconsistencies. The sale price of a property is compared to its value in the IFI declaration (real estate wealth tax) and to its market value. This explains why Emmanuel Macron had to raise, last year and at the request of the tax authorities, the value of his residence in Le Touquet by 15%.


The SCI (real estate civil societies) are for the tax authorities diabolical instruments, which considers that they allow both to evade the tax and to transmit a property without paying duties. Typically, specifies Olivier Rozenfeld, “a saver creates an SCI subject to corporation tax to buy usufruct on housing. The income from this usufruct will be taxed at IS and not at its marginal income tax rate ”. A significant gain since the tax will be 28% whereas it would have been, for a very wealthy taxpayer, more than 65%: 45% tax at the marginal bracket, up to 4% exceptional contribution on high income, plus 17.2% social security contributions.


Taxation Remote tax audit