Types and powers of IRD investigation cases

To combat tax evasion, tax avoidance, and tax avoidance, the Inland Revenue Department investigates, audits, and randomly checks taxpayers’ files, and reminds taxpayers to voluntarily abide by the tax regulations. Spot checks, audits, and investigations work in hopes of recovering back taxes, imposing penalties to deter tax evasion, and encouraging taxpayers to file correct tax returns on time. Cases subject to spot checks, audits, and investigations by the IRD can be divided into the following four categories:

• Review cases

These cases are usually opened by someone reporting to the Inland Revenue Department, so these are also called whistle-blowing cases, and the review methods and procedures are simpler than other cases.

• Desk review

A small number of cases have been selected by computer programs from the pre-assessment and then-checked cases. The system asks the selected taxpayer a pre-made question.

• On-site audit

The staff of the tax bureau will be responsible for visiting the places where the taxpayer operates its business, to better understand the operation of the taxpayer’s business.

•    look deep into

Inland Revenue Department staff will conduct in-depth investigations into tax evasion cases, which usually involve the last six years of assessment or up to ten years of assessment in the case of suspected cases of deliberate tax evasion.

The Inland Revenue Ordinance has several parts that give the Inland Revenue Department staff the power to request information from taxpayers and other relevant departments or persons. Therefore, it is easy for taxpayers to detect tax evasion, tax avoidance, or tax avoidance by tax bureau personnel. The relevant regulations include:

• Request information from taxpayers or other persons, such as banks, stockbrokers, customers, suppliers, lawyers, etc.…

• Ask a lawyer or real estate agent for certain property transaction information.

• Authorized by the Tax Appeals Board to require taxpayers to provide a statement of expenses and income and a balance sheet.

• If necessary, apply to a magistrate for a search warrant to search and remove accounts and related documents at the taxpayer’s residence and premises where he carries on business.

• Request the required information from the taxpayer’s employer, government authorities

• In the case of tax avoidance cases, the Inland Revenue Department may disregard false, fictitious, or unrealized transactions, assess tax in an appropriate manner, and cancel the original tax benefits.

The above information is for reference only. If in doubt, we welcome your tax inquiry