Violation of the provisions of tax codes may result in the imposition of tax penalties (tax evasion and non-compliance penalties) stipulated under the Tax Procedure Code ("TPC"), as well as other liberty bindings and monetary fines that fall within the scope of the criminal courts.
There are various possibilities that serve for the dismissal of such penalties.
Payment is the first reason for the dismissal of tax penalties. If paid in compliance with the procedure set forth under Art. 110-112 of the TPC, within 30 days after the penalty notification duly issued and notified to the taxpayer, such penalty shall be eliminated. The tax penalties shall be paid within one month after the end of the prescribed time given that a lawsuit has not been filed against the penalty at the tax courts; if such a lawsuit was filed, after the notification of the notice issued by the tax office upon the court ruling to the addressee. If desired, taxes and penalties for which the collection is suspended because of the filing of the lawsuit may be partially or fully paid by taxpayers.
It is also possible to dismiss tax penalties through conciliation. Conciliation was introduced to the TPC through Code No. 205 that entered into force on 19.02.1963, and is set forth under Art. 1 et seq. Then Code No. 4369, which was entered into force on 22.07.1998, the conciliation provisions were restated. The aim of conciliation is given that there is an objection of the taxpayer against the taxation process, to discuss such objections between the taxpayer and the tax administration by not bringing the issue before the courts, to agree on a certain amount, and to come to an amicable solution. According to the Code, the administration and the taxpayer may resort to conciliation in cases where the provisions of the TPC regulating tax evasion are not completely understood, or there is a situation of written error as stated under TPC Art. 369, or there are tax errors that are stipulated under TPC Art(s). 116, 117 and 118 or any other errors, or in the case of a difference of opinion between the views adopted by court rulings and the administration. Conciliation may be adopted prior to or after the assessment.
The taxpayer and offender responsible to whom the tax penalty notice was delivered may object to such tax penalty by filling a lawsuit against it. According to TPC Art. 377, taxpayers and those to whom had a tax penalty assessed, may file a lawsuit against the assessed taxes and imposed penalties; as well, they may bring an action for the taxes estimated by the tax office valuation commissions. In order to file these lawsuits, the tax shall be assessed, the penalty shall be imposed, the decisions of valuation commissions shall be notified; and for the taxes collected through withholdings, payment shall be made and the tax withheld by those who made such payment. Taxpayers shall not object to the taxes they declare and the taxes assessed based on their declarations.
TPC Art. 116 stipulates the "Tax Error;" accordingly, the tax error, unjust demand, or collection of less or more taxes due to errors made in the calculation or taxation processes. As is seen, tax error is divided into two areas, those being "miscalculation" and "taxation error." While the TPC Art(s).117 and 118 sets forth these errors on a numerus clausus basis, TPC Art. 119 stipulates how these errors may emerge. According to this provision, errors can be revealed by the relevant tax officer or during the examinations made by their senior officers, or during tax inspections or tax examinations or upon the application of the taxpayer. Taxpayers may request in writing to the relevant tax authorities for the correction of error. In accordance with TPC Art.120, the principle of the tax office in question shall be competent to decide the tax error. Obvious and absolute errors shall be corrected ex officio. In the case of a correction made against the benefit of a taxpayer, such taxpayer shall file a lawsuit with the tax courts. Upon exhaustion of these prescribed times as per TPC Art. 124, the taxpayers whose application for correction is denied may apply to the Ministry of Finance by way of complaint.
Prescription, and in other words, statute of limitations, is the legal institution regulating the elimination of the right to demand a right by prescribing a time period. The statute of limitations in tax law means the time when the right of the tax office to demand a tax receivable is eliminated. The statute of limitations in tax law, are divided into appropriate sections of accrual, collection and prescription in penalty.
TPC Art. 114 regulates the prescription times. Accordingly, taxes that have not been assessed and notified to the taxpayer within 5 years following the calendar year in which the tax receivable has arisen, shall be subject to prescription. In this instance, the reasons that cause the prescription to cease are listed in the TPC.
For the tax receivables falling in the scope of the Law on the Procedure of the Collection of Public Receivables numbered 6183 that were finalized, however remain unpaid, and are in the collection phase, a "collection" prescription shall be applied. According to Law numbered 6183 Art. 102, the receivable is subject to prescription 5 years following the start of the calendar year upon which the receivable becomes due. The collection prescription ceases and commences given any of the circumstances that have arisen as listed under Article 103 of Law numbered 6183 (payments, seizure, collection, notification of payment orders, declaration of property, etc.).
Prescriptions are also used for tax penalties. Tax evasion penalties are prescribed 5 years following the calendar year in which the tax receivable commenced, non-compliance penalties imposed in accordance with TPC Art. 353 and Art. 355bis are prescribed 5 years following the first day of the year preceding the year in which the non-compliance occurs, non-compliance penalties are prescribed 2 years following the first day of the year in which the non-compliance is committed. Within these periods, the prescription shall cease once the penalty notification is delivered.
In our tax system, a procedure of deletion also exists for tax claims, default interest and penalties.
According to TPC Art. 115, because of fire, earthquake, landslide, flood, drought, frost, harmful animals, vermin infestation and similar disasters: (1) the tax debts and penalties of the taxpayers who lost at least one-third of their assets due to these disasters: (2) the Land Tax debts and tax penalties of the taxpayers who lost at least one-third of their agricultural products accrued for the year corresponding to the harvest affected by such disaster may be partially or completely eliminated. These decisions shall be made by the Ministry of Economics and the authority for deletion may transferred to the local authorities.
Furthermore, Art.105 of Law numbered 6183 is a provision that is parallel to the regulation of TPC Art.115 for tax receivables in the execution phase. In order to benefit from this provision, the relevant public authorities shall be applied within six months from the date of the disaster.
Waiver of Accrual or Execution
Under TPC Art. 115 bis and the Law on the Procedure of the Collection of Public Receivables numbered 6183 Art. 106, waiver of accrual or execution is stipulated from the circumstances where there is no possibility for collection, or the material threshold is below the legal limits, or the expenses for the collection or execution costs exceed the receivables. The material threshold is regulated under the TPC is TRL 24 as of 01.01.2016.
As it stated in various provisions of the TPC, the obligations and duties of taxpayers shall not terminate upon the taxpayer's death. However, upon the demise of the taxpayer, the tax penalty shall be eliminated. As a result of the basic principle of criminal law which is "the principle of individual criminal responsibility," tax penalties shall be forgiven upon the death of the taxpayer. However, tax debts shall not terminate with death; these pass to the taxpayers' successors who are the heirs.
Doç. Dr. Ahmet EROL, Türk Vergi Sistemi ve Vergi Hukuku, Ankara 2012.
Prof. Dr. Şükrü Kızılot, Av. Zuhal Kızılot, Vergi İhtilafları ve Çözüm Yolları, Ankara 2014.
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