Article 63 of the Tax Collection and Administration Law provides for four situations that are recognized as tax evasion, including forgery, alteration, concealment, unauthorized destruction of account books and bookkeeping vouchers, overstating expenditures or omitting or understating revenues in the account books, and refusing to make a declaration or making a false tax declaration after being notified to do so by the tax authorities. Whether constitutes tax evasion is often related to the tax recovery period. In practice, due to the lack of clarity of laws and regulations, "failure to make a tax declaration" is tax evasion controversy, this article from a judicial decision, from the elements of tax evasion, the application of the recovery period and other perspectives to analyze this issue.

I. Jurisprudence: Partial filing after notice to file is not tax evasion

(I) Basic facts of the case

Company A acquired the 13 land use rights in the case successively from 1998 to 2009. on June 28, 2019, the tax authorities issued a Notice of Ordering Correction within a Time Limit, requesting Company A to make up for the unpaid urban land use tax for the period from November 1, 1999 to March 31, 2019 in relation to the declaration of the aforementioned 13 land use rights. In January 2020, Company A made a retroactive payment of urban land use tax for part of the 13 pieces of land involved in the case. Thereafter, the tax authorities approved the tax in the case of Company A and issued the Notice Ordering Provision of Tax Guarantee, Decision on Tax Preservation Measures and Decision on Tax Enforcement, and withheld 6.23 million yuan of tax and 6.1 million yuan of late payment fee from Company A's bank account. Company A objected to the preservation and enforcement measures of the competent tax authorities and filed an administrative reconsideration, which upheld the original administrative act. Company A then filed a lawsuit. There are many controversial points in this case, and this article only discusses whether partial declaration constitutes tax evasion and the application of recovery period after Company A has been notified by the tax authorities to make declaration.

(II) Focus of dispute: whether partial declaration after notification of declaration by tax authorities constitutes tax evasion

1. Court of first instance: Company A made partial declaration after notification and did not commit tax evasion.

The tax authorities had repeatedly requested Company A to pay tax on time and imposed administrative penalties for Company A's failure to declare tax on time. Company A chose to make a partial declaration and did not take the initiative to make a declaration, did not pay tax on time and did not make a truthful declaration, but did not engage in tax evasion or omission.

Regarding the recovery period, the Court of First Instance held that a recovery period of three or five years should be applied to Company A's failure to truthfully declare tax, and a late payment fee of five ten thousandths of one percent of the tax should be imposed on a daily basis from the date of late payment of tax. After receiving the Notice of Ordering Correction, Company A paid the land use tax and late fee for 13 land parcels ranging from 2 to 5 years, and the tax and late fee within the recovery period declared by Company A should be deducted. The competent tax authorities appealed against the first instance judgment.

2. Appellant tax authority: Company A did not make tax declaration and did not pay or underpaid tax belonged to tax evasion, with no limitation of recovery period.

Company A did not declare and pay the land use tax according to the regulations after obtaining the land use right in the case, which did not belong to the category of three or five years as stipulated in Article 52(1) and (2) of the Law of Taxation Collection and Administration. Article 52 of the Taxation Administration Law only provides for the recovery period due to the responsibility of tax authorities, the responsibility of taxpayers' non-subjective intention and mistakes, tax evasion, tax resistance and tax fraud, but does not provide for other cases, i.e. Article 32 is a generally applicable provision and Article 52 is an exception applicable provision, therefore, for the case of Company A's failure to take the initiative in declaring, paying tax on schedule and making inaccurate declaration, Company A shall recover the land use tax according to the provisions of Article 32 of the Taxation Administration Law. Therefore, Company A's failure to take the initiative to declare, pay tax on time and make inaccurate declaration should be based on Article 32 of the Law of Taxation Collection and Administration, and the tax and late payment fees from the month following the month of obtaining the land use right certificate should be recovered. After Company A obtained the land use right in the case, it should make declaration and pay urban land use tax according to law, which is its legal obligation. Company A did not make tax declaration, did not pay or underpaid tax with subjective intention, which is tax evasion, and its recovery period is not limited by three or five years. Although the appellant did not send to company A in the tax material that the appellee there is tax evasion, tax evasion behavior, but the company's behavior is a tax evasion, tax evasion behavior.

Company A: "Failure to file tax returns", not tax evasion.

Due to the government and other objective reasons, Company A was unable to carry out actual development and use of the 13 pieces of land involved in the case, based on the tax situation of the unpaid tax of the 13 pieces of land, Company A did not have subjective intent, there was no objective falsification, and the unpaid tax belonged to the situation of "non-payment of taxes by not making tax declaration", which was in line with the provisions of the "Tax evasion" and the "Non-payment of tax". "Company A's behavior does not belong to tax evasion, and the first instance judgment is that the tax involved in this case shall be applied for not more than five years. It is correct to decide in the first instance that the tax recovery period should not exceed five years for Company A's failure to declare and pay the tax on time.

The court of second instance: the tax authority has no evidence to prove that Company A constitutes tax evasion, and the recovery period for non-payment or underpayment of tax due due as a result of the taxpayer's failure to make tax declaration is three or five years.

From the provisions of Article 52 of the Tax Collection and Administration Law and the recovery period stipulated in the Reply No. 326, it can be seen that, although taxpayers should declare tax in time in accordance with the law, tax authorities should also take the initiative to fulfill the duties of supervision and tax collection, and the tax authorities should take the initiative to fulfill their duties, and the tax authorities should not take the initiative to fulfill their duties, unless the taxpayers are in the legal situation of tax evasion, tax resistance or tax fraud, and the taxpayers do not make tax declarations resulting in the situation of non-payment or underpayment of tax due to the taxpayers' failure to make tax declarations. The recovery of tax is limited by the legal time limit for the recovery of tax. This is the provision of the law and the requirement of administration in accordance with the law. After acquiring the 13 pieces of land, Company A did not declare and pay the tax in time, but the appellant did not have any evidence to find that it belonged to the situation of tax evasion, tax resistance or tax cheating; according to the above provisions, the period for the tax bureau to recover and collect the tax of Company A is three years, and the period can be extended to five years under special circumstances.

(III) Brief analysis of the case

In this case, Company A paid part of the tax after notification of declaration by the tax authority, and the focus of the dispute is whether the behavior of Company A's partial declaration after notification belongs to "refusing to declare after notification of declaration". Company A considered that there was no subjective intent and the unpaid tax belonged to the situation of "non-payment of tax due as a result of failure to make tax declaration"; the court of first instance considered that Company A chose to make partial declaration, and there were cases of failure to make declaration on its own initiative, failure to pay tax according to the due date and failure to make truthful declaration, but it did not constitute tax evasion; the court of second instance reasoned from the point of view of the principle of fault liability, and put the principle of fault liability into practice. The court of second instance reasoned from the perspective of the principle of fault responsibility, assigned the burden of proof of fault to the tax authority, and held that the tax authority had no evidence to conclude that Company A constituted tax evasion; the tax bureau held that after Company A obtained the land use right, it was its legal obligation to make tax declaration and pay urban land use tax according to the law, and that Company A's failure to pay the tax in full and on time despite the notification was subjective and intentional, and constituted tax evasion.

In the author's opinion, the discussion of this issue should be analyzed from the following aspects: on the one hand, what is "refusing to declare after notification"? Does partial declaration after notification constitute "refusal to declare"? On the other hand, what kind of recovery period should be applied to "failure to file a tax return"?

II. What is "refusing to make a declaration after being notified to do so"?

(I) Subjective intent is one of the constituent elements of tax evasion

In the aforementioned case, the court of second instance assigned the burden of proof of tax evasion to the tax authorities, and held that without sufficient evidence to show that Company A constitutes tax evasion, it is impossible to conclude that Company A's failure to complete the declaration is tax evasion.

Paragraph 1 of Article 63 of the Tax Collection and Administration Law provides that "A taxpayer who forges, alters, conceals, or destroys without authorization account books and bookkeeping vouchers, or overstates expenditures or omits or understates income in account books, or who refuses to make a declaration after being notified to do so by the tax authorities or who makes a false declaration of tax, and who fails to pay, or underpays, the tax payable, is guilty of tax evasion. " From the above "forgery", "concealment", "unauthorized destruction", "refusal to declare", "false declaration" and other provisions can be seen that the composition of tax evasion must have subjective intent. The State Administration of Taxation (SAT) in the State Tax Office Letter [2007] No. 513, the General Taxation Letter [2013] No. 196, the General Taxation Letter [2016] No. 274 and other approvals, also made clear that "the tax authorities do not have evidence to prove that the taxpayer has the subjective intention of tax evasion, and will not deal with it in accordance with tax evasion". Therefore, whether it is the provisions of the Tax Collection and Administration Law or the spirit of the State Administration of Taxation's approval, proving that the taxpayer has subjective intent is one of the constituent elements for determining tax evasion, and taxpayers who are unable to prove that they have subjective intent to commit tax evasion shall not be dealt with according to tax evasion.

(II) Situation of "notified by tax authorities to declare"

Article 2 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Tax Evasion and Tax Resistance stipulates that the circumstances of "declaration by notice of the tax authorities" include the situation that the tax registration has been applied for, and that the tax registration is not required by law, or that the tax authorities have not yet applied for the tax registration and declared it by written notice. Although this interpretation is the interpretation of the criminal law level, but in the tax evasion and tax evasion crime under the premise of the convergence of execution and punishment, can be referred to apply to the "Tax Collection and Administration Law" in the "notification of the declaration of the refusal to declare" interpretation. Based on this, there are views in practice that the taxpayers or withholding agents who have applied for tax registration are regarded as knowing their tax obligations and do not need to be notified by the tax authorities, and that the behavior of failing to make a tax declaration according to the registered tax types and not paying or underpaying tax constitutes tax evasion, which is an unfavorable presumption for the taxpayers and is contrary to the basic principle of interpretation in favor of the administrative counterparties.

In this case, Company A considered that the land acquired by it had not been actually developed due to governmental reasons and other objective factors, and had not reached the point of time for payment of urban land use tax. The court of the first and the second instance found that Company A's perception of the point of time for payment of tax was wrong, and that it should have paid the urban land use tax in the following month after acquiring the right to use the land instead of the time when it was actually developed. However, the court held that Company A made a partial declaration after notification by the tax authorities, and its behavior did not constitute tax evasion, and there were circumstances that it did not declare on its own initiative, did not pay tax according to the schedule, and did not declare truthfully, which belonged to the "circumstances of failure to make a tax declaration", and the court of the second instance even held that the tax authorities were unable to prove that Company A had constituted tax evasion and thus it was not appropriate to recognize Company A as a tax evader. for tax evasion.

III. How to apply the recovery period for failure to file a tax return?

(I) Disputes over the application of the recovery period for "failure to file a tax return".

The Law on Administration of Tax Collection stipulates the tax recovery period in three cases: if the taxpayer fails to pay or pays less tax due to the responsibility of the tax authority, the recovery period is three years; if the taxpayer fails to pay or pays less tax due to the mistake of calculation, the tax authority can recover the tax and late payment fee within three years, which can be prolonged to five years under special circumstances. For tax evasion, tax resistance and tax fraud, there is no limitation on the period of recovery.

At present, the Law on Administration of Tax Collection has not made clear provisions on the application of the recovery period for "failure to make tax declaration", which triggers more disputes, such as this case, the tax authorities believe that the recovery period provisions are not extended, that is, they are only applicable to the responsibility of the tax authorities and taxpayers to calculate the error in the two cases, but not applicable to other cases, the general situation should be In accordance with the provisions of Article 32, "the taxpayer fails to pay the tax in accordance with the prescribed period, the withholding agent fails to pay the tax in accordance with the prescribed period, the tax authorities in addition to ordering the payment of the tax, from the date of late payment of tax, the day of the late payment of taxes, plus five ten thousandths of the late payment of late fees". The court adopted an interpretation in favor of the taxpayer, holding that according to the basic requirements of administration in accordance with the law, the administrative organ shall not make a decision affecting the legitimate rights and interests of the administrative counterparty or increasing the obligations of the administrative counterparty in the absence of the provisions of laws, regulations and rules. In the legal provisions of the existence of a variety of interpretations, should first consider choosing to apply the interpretation of the administrative counterparty, that the tax authorities have timely and full collection of tax legal duties, where the taxpayer does not belong to the category of cases of miscalculation and evasion of anti-fraud taxpayers can be presumed to be the responsibility of the tax authorities, and then that this case belongs to the responsibility of the tax authorities to lead to the collection of less tax, the application of the three-year or five-year period of recourse.

(II) Failure to file a tax return does not constitute tax evasion and should not be subject to an unlimited recovery period

Approval Reply No. 326 stipulates that "Article 52 of the Tax Administration Law provides that the situation of non-payment or underpayment of tax due as a result of taxpayers' failure to file tax returns as stipulated in Paragraph 2 of Article 64 of the Tax Administration Law does not belong to the cases of tax evasion, resistance to tax, or tax cheating, and that the period of recovery shall be three years in general in accordance with the spirit of the provisions of Article 52 of the Tax Administration Law and may be extended to five years in special circumstances". five years". It can be seen that there is an essential difference between failure to make tax declaration and tax evasion, and the Tax Collection and Administration Law has made strict limitation on tax evasion, which is limited to the aforementioned four categories of circumstances, excluding taxpayers' failure to make tax declaration, and the failure to make tax declaration has not yet reached the degree of infringement of legal interests of "refusing to make declaration after notification to make declaration", and it can not be equated with tax evasion. Can not be equated with tax evasion.

In practice, there are also a lot of courts refer to the 326th approval to make a determination, such as Zibo Intermediate People's Court of Shandong Province (2021) Lu 03 line final 52, "Liu Moumou husband and wife did not transfer the income of the stake to declare tax behavior, belongs to the "People's Republic of China Taxation Levy Management Law" Article 64, paragraph 2 of the provisions of the taxpayers do not pay tax declarations The taxpayers' failure to make tax declaration and non-payment or underpayment of tax payable as stipulated in Paragraph 2 of Article 64 of the Tax Collection and Administration Law of the People's Republic of China do not belong to the cases of tax evasion, tax resistance and tax cheating as stipulated in Paragraph 3 of Article 52 of the said Law which can be recovered indefinitely, and the period of recovering the unpaid or underpaid tax due to such failure shall be three years, which may be extended to five years under special circumstances."

In the author's opinion, the application of the behavior of "refusing to declare after notification of declaration" should be analyzed specifically. In the case that the current laws and regulations for "failure to make tax declaration" resulting in non-payment or underpayment of tax are not clearly stipulated, the determination of tax evasion should be based on the following factors In the absence of clear provisions in the current laws and regulations on the situation of non-payment or underpayment of tax due to "failure to file tax returns", the determination of tax evasion requires the elements of subjective intent in addition to the elements of behavior and results. In determining whether a taxpayer's behavior constitutes tax evasion, the above three aspects should be considered comprehensively.