I recently saw a case where the company was still being asked by the IRS to pay a back tax penalty of more than $30 million after the write-off ......

I. Fiasco caused by write-offs

In February 2022, Liaoning Auction Co., Ltd. was investigated even after it had been canceled, and the total amount of back taxes and fines was $4.5 million.More than 30 million dollarsThe

It is reported that the company's actual controller He Fuchun, after obtaining high illegal income, in order to hide the tax, in October 2016, withdrew from the Zhongxiang Auction shareholders identity, while changing the legal representative, after a number of changes in the legal representative and shareholding change to his mother Zhang Songlan on the body.

In 2019, Zhongxiang Auction Company was written off.He Fuchun's mother, Zhang Songlan, died in 2020. He Fuchun staged a "divine operation"! With the help of his dead mother, he has staged a good show.

In 2021, the Liaoning Shenyang Tax Inspection Bureau received a report from the public and went to investigate.It was verified that the canceled enterprise had obtained two auction commission incomes totaling 28,191,500 yuan in May 2016 without declaring them, which was defined as tax evasion by the competent tax authorities.

Accordingly, the Tax Inspectorate imposed an administrative penalty on the company:

Recovery of value-added tax, surcharges and corporate income tax totaling$7740742.12Late payment; late payment fee of five ten-thousandths of one percent of the amount of late payment of tax is added on a daily basis; underpayment of value-added tax (VAT), urban maintenance and construction tax (UMCT), and enterprise income tax (EIT) is proposed to be punished by a fine of three times the amount of the total amount of$23099059.62Total back tax penaltiesMore than 30 million dollarsThe

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Secondly, a number of businesses have been investigated after they have been written off!

The official platform of Fuzhou Taxation has released a number of Tax Treatment Decisions on enterprises that have lost their connections, among which, a number of enterprises have actually gone through the tax deregistration procedures!

Among these investigated enterprises, some of them were found to have made false invoices because of abnormal data of upstream enterprises (e.g. the incurred amount of utility bills did not match the income); some of them were found to have evaded taxes because of abnormal comparison of the Golden Tax III system; and there were also trading companies that cheated the export tax rebate ...

How can a company still be subject to a tax audit after it has been canceled?

In fact, when tax write-offs are made, the IRS will not only focus on the financial reports and invoicing, but in some places, the tax will alsoConduct a risk scan using big data systemsIf a serious problem is found it may be pushed directly to the auditing department!

Therefore, it is not surprising that if an enterprise does not clear up the problems when it is canceled, it will be audited by the tax bureau again after it is canceled~.

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III. Before the company is written off

These are the top 5 tax issues that must be dealt with!

To not be investigated, the first thing you need to do is to check yourself, before the tax write-off, these easy to "mine" pit must be properly dealt with:

I. Inventory on the books, but not in kind

Generally, there are two reasons why inventories are not accounted for:

1Inventory sold

Goods that have been sold are not accounted for, not invoiced, and sales revenue is concealed, while the cost of goods sold is not carried forward, resulting in the number of inventories on the books being greater than the actual number of inventories.

The behavior is suspected of tax evasion, the enterprise in this situation should beware, need to immediately self-examination, and pay back the value-added tax, enterprise income tax and other taxes, the consequences of being found by the tax will be serious!

2. Inventory has been destroyed

Inventory destruction needs to identify the cause, if there is sufficient evidence to prove that it is a reasonable wear and tear, then VAT does not need to be dealt with, and the loss can be deducted before corporate income tax;

In the case of extraordinary losses, VAT inputs are not deductible and there are conditions for deductions before corporate income tax, as set forth below:

II. Inventory on the books, but expired

There are two ways to handle the situation:

1. Treatment as loss of assets

Asset losses that are actually incurred in the course of production and business activities are allowed to be deducted before enterprise income tax;

The treatment of VAT inputs is divided into the following two scenarios:

2. Low price sales

Usually, when an enterprise disposes of goods on expiration date or sells goods at a reduced price due to liquidation of debts, change of production, closure of business, etc., it can generally be regarded as low-priced sales behavior with justifiable reasons, and will not be regarded by the tax bureau as a low price and be approved.

Third, VAT has retained credit can not be refunded, invoiced to the related party

According to the provisions of Cai Shui [2005] No. 165, the tax authorities will not refund the levied tax not yet deducted from the inventory or the tax credit after the enterprise is canceled.

A business can sell goods to an affiliate, which creates output tax, and by invoicing the affiliate for inputs, it passes on the retained tax to the affiliate.

However, a word of caution is in order:Transactions with affiliates must have a reasonable business purpose and be fairly priced, otherwise, they may be recognized as false invoicing Oh!

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IV. Bosses and employees borrowed money from the company and have not returned it

This situation may involve the payment of personal income tax, as specified below:

Therefore, you should check the "other receivables" and other current accounts before you write off your business.

V. Underpayment of stamp duty

Stamp duty is levied on a wide range of items, including purchases, sales, leases, capital injections and business books.

And this normally insignificant little tax is usually turned upside down by the IRS when it comes time to write it off.

The only way to avoid risk is to check yourself first!

IV. In the event of the cancellation of an enterprise.

How long does it take to check accounts? What are the Frequently Asked Questions?

I. How to cancel a non-regular household?

Enterprises that have been included in the non-normal households are also required to first supplement their tax returns, pay back taxes and pay the corresponding late fees and penalties, and lift the non-normal status before submitting an application for cancellation in accordance with the normal procedures.

Second, if it is a natural person shareholder, is it appropriate to transfer the equity or cancel it?

There are pros and cons to both:

Third, when the write-off tax to check three years of accounts?

Not necessarily.

At present, tax regulations do not specify that the company must check the accounts when it is canceled, depending on the specific circumstances of the enterprise.

The reason for the three-year account check is that Article 52 of the Tax Administration Law provides for a tax recovery period:

"If a taxpayer or withholding agent fails to pay or underpays a tax due to the responsibility of the tax authorities, the tax authorities may, within three years, require the taxpayer or withholding agent to make up for the tax, but shall not impose late payment charges."

Once again, let's remind everyone: don't think it's okay after the write-off, if there is tax evasion and other illegal behavior, the tax authorities can pursue the responsibility indefinitely.

Fourth, the company canceled and then recovered the debt, how to deal with?

There is disagreement in practice on this issue.

Reference can be made to the Shanghai Municipal High Court's "Answers to Several Questions on How the Property Rights and Interests Enjoyed by a Company After It Has Been Legally Written Off Should Be Dealt With": If a shareholder, after the company has been written off, obtains a claim or property right or interest that the company has omitted from its liquidation, the claim or property right or interest, which originally belonged to the company's property, shall be attributed to all shareholders and shall be distributed by all shareholders in accordance with the articles of incorporation of the company or the provisions of the law.

V. How to pay tax on the liquidation proceeds of a company?

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