Letter dated June 30, 2020 No. BS-4-21/ [email protected]
In connection with requests received by the Federal Tax Service regarding periods for recalculating previously calculated property tax for individuals (hereinafter referred to as the tax), we are sending the following recommendations.
In accordance with paragraph 21 of Article 52 of the Tax Code of the Russian Federation (hereinafter referred to as the Code), recalculation of previously calculated tax is carried out for no more than three tax periods preceding the calendar year of sending a tax notice in connection with the recalculation, unless otherwise provided by paragraph 21 of Article 52 of the Code. The recalculation provided for in paragraph one of paragraph 21 of Article 52 of the Code is not carried out in relation to tax if it entails an increase in previously paid tax amounts.
According to paragraph 6 of Article 408 of the Code, in the case of an application for a tax benefit, the amount of taxes is recalculated for no more than three tax periods preceding the calendar year of the application, but not earlier than the date the taxpayer becomes entitled to a tax benefit.
The Code does not establish other rules limiting the period for which tax recalculation can be carried out.
Thus, in the absence of conditions established by the Code limiting the period for tax recalculation (when tax recalculation is carried out no more than three tax periods preceding the calendar year of sending a tax notice in connection with the recalculation, or no more than three tax periods preceding the calendar year filing an application for tax relief), such recalculation can be carried out if there are grounds relating to any tax period.
For example, the basis for such a tax recalculation may be the exclusion by decision of an authorized executive body or a court of a taxable object from the list of objects determined in accordance with paragraph 7 of Article 378 of the Code for the previous tax period, entailing exemption from paying tax, in accordance with paragraph 3 of Article 346, paragraph 4 of article 346, paragraph 10 of article 346 of the Code.
Bring the recommendations to the tax authorities administering the taxation of property of individuals.
These clarifications are for informational and reference purposes only (advisory, not mandatory) in nature, do not establish generally binding legal norms and do not interfere with the application of legal regulations and judicial acts in a meaning different from the above clarifications.
Acting State Advisor of the Russian Federation, 2nd class S.L. Bondarchuk
Drawing up an application for recalculation
An application for recalculation must be sent to the local tax office. Typically, the tax notice you receive will contain a form for such an application. The application can also be drawn up in free form, taking into account a number of mandatory elements. These elements of the application will be:
1) Full name
2) TIN
3) Address of the inspectorate to which the application is submitted
4) Number of the notification received
5) The text of the complaint itself
6) Copies of documents that support the applicant’s arguments.
There are several ways to submit an application to the tax office:
1) Come to the inspection in person
2) Transfer the application to the representative for subsequent submission by proxy or on the basis of the powers established by law;
3) Through the taxpayer’s personal account
4) By mail
Legal advice: If you decide to send an application by letter, we recommend sending it by post with a list of the attachments, so that in the future you will have proof that the application was sent properly.
The application was made before tax was paid
A notification with updated data must be sent to you within 30 days from the date of registration of your application with the tax office. The notice must include both the old incorrect tax value and the new one. If you did not manage to pay the tax amount before noticing the error in the notification, then all that remains is to pay the tax office for the correct, updated amount.
The application was made after payment of tax
If the inspectorate agreed with your request to recalculate the tax only after paying an amount exceeding the required amount, it is worth thinking about the further legal fate of the overpaid money.
The return of overpaid funds entails the preparation of a new application to the tax office. Tax authorities will have a calendar month to make a decision on the refund and return these funds. You can submit an application either in the form of a printed or handwritten document, or in the form provided to you in your personal taxpayer account on the official website of the Federal Tax Service of Russia.
The overpaid amount will be credited in the same manner as the refund. Keep in mind that offsets are made only for taxes paid to the same budget as the tax for which the overpayment occurred. Thus, overpayment of property tax can only be offset against land tax and trade tax. We also note that if you have arrears, penalties or fines for non-payment of land tax and/or trade tax (if you are an individual entrepreneur), then the tax office will automatically offset the funds for them. Please note that the offset rule for arrears, penalties, and fines is also subject to a 3-year limit for offset.
Tax dispute
All of the situations described above are a quick and effective way to restore your violated tax rights if the tax inspectorate admits a mistake or considers your arguments convincing. However, often the tax authority does not agree with even the most reasonable arguments of the taxpayer. In this case, you cannot do without the help of a tax lawyer, since you will have to go through a tax dispute procedure. If you are lucky enough to prove your position to a higher authority of the tax service, then you can still count on a speedy solution to the problem that has arisen, but if tax authorities at all levels do not agree with you, then the only way to return the money will be a lawsuit.
How to achieve recalculation of property tax based on cadastral, rather than inventory, value?
The final transition to calculation based on cadastral value will be completed by 2021 and most regions have already completed this transition. However, if in your region the property tax is still calculated based on the inventory value, then an unpleasant situation for the taxpayer may arise when the tax on the inventory value turns out to be higher than the tax on the cadastral value of the property, although for a long time it was impossible to protest this state of affairs. However, in February, the Constitutional Court ruled that taxpayers have the right to demand a cadastral valuation of their property and the corresponding assessment of tax. If you think that in your situation it is more profitable to pay tax at the cadastral value, you should go to court and defend your right.
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New rules for tax recalculation (will come into effect in January 2021)
When the quantitative and qualitative characteristics of an object change
In the chapters of the Tax Code of the Russian Federation devoted to the property tax of organizations, the property tax of individuals and land tax, the concept of “changes in the quantitative and qualitative characteristics” of the object of taxation appeared.
In relation to land tax, this means changing the type of permitted use of a land plot, transferring land from one category to another and changing the area of a plot. For property tax (both organizations and individuals), this means, in particular, a change in the area or purpose of the object. When the quantitative and qualitative characteristics of a taxable object change, its cadastral value is adjusted. Following this, the amount of tax calculated based on the cadastral value also changes. The law under comment approved the rules by which the amount of tax must be recalculated. Thus, property tax (both organizations and individuals) should be recalculated from the date when the entry on the adjustment of the cadastral value is made in the Unified State Register of Real Estate (new editions of clause 15 of Article 378.2 of the Tax Code of the Russian Federation and clause 2 of Article 403 Tax Code of the Russian Federation). If changes occurred in the middle of the year, then when calculating the tax, the following rules must be taken into account (new clause 5.1 of Article 382 of the Tax Code of the Russian Federation and clause 5.1 of Article 408 of the Tax Code of the Russian Federation):
- for the period from January 1 to the specified date, the tax amount is calculated based on the previous cadastral value taking into account the coefficient. It is equal to the number of full months that have passed from January 1 to the specified date, divided by the number of calendar months in the tax period. If an entry is made after the 15th day, the current month is considered a full month;
- for the period from the specified date to December 31, the tax amount is calculated based on the changed cadastral value taking into account the coefficient. It is equal to the number of full months that have passed from the specified date to the end of the tax period, divided by the number of calendar months in the tax period. If an entry is made on or before the 15th, the current month is counted as a full month.
We would like to add that until 2021, adjustments to the quantitative and qualitative characteristics of an object will not be taken into account when calculating the property tax of organizations and the property tax of individuals.
Submit property tax calculations and declarations using current forms Submit for free
There are no significant innovations regarding land tax. The current version of paragraph 1 of Article 391 of the Tax Code of the Russian Federation states: adjustments to the cadastral value of a plot due to a change in its area, type of permitted use or transfer of land to another category are taken into account from the moment the corresponding entry is made in the Unified State Register. Starting from January 2021, a similar rule will be contained in the new paragraph 1.1 of Article 391 of the Tax Code of the Russian Federation.
When correcting an error and when appealing the cadastral value
The cadastral value of a real estate property and land plot may change by decision of a special commission, by a court decision, or by correcting a technical error previously made in the Unified State Register of Real Estate. Such changes entail a recalculation of the tax calculated based on the cadastral value.
Now there is a rule according to which, when a technical error is corrected, property tax (both organizations and individuals) and land tax are recalculated retroactively for all periods from the moment the error occurred. In the event of a change in the cadastral value by decision of the commission or by a court decision, the above taxes are subject to recalculation from the tax period in which the application for revision was submitted (but not earlier than the date the disputed cadastral value was entered into the Unified State Register of Real Estate). This is enshrined in paragraph 15 of Article 378.2 of the Tax Code of the Russian Federation, in paragraph 2 of Article 403 of the Tax Code of the Russian Federation and in paragraph 1 of Article 391 of the Tax Code of the Russian Federation.
From January 1, 2021, an innovation will be introduced regarding the consequences of changing the cadastral value of an object by decision of the commission or by court decision. From this date, the tax amount will be recalculated retroactively for all periods in which the disputed cadastral value was applied (and not from the moment the application for dispute was filed, as now). When correcting technical errors, everything will remain the same: the tax will be recalculated retroactively for all periods from the moment the error occurred. These provisions are set out in new editions of paragraph 15 of Article 378.2 of the Tax Code of the Russian Federation, paragraph 2 of Article 403 of the Tax Code of the Russian Federation and in the new paragraph 1.1 of Article 391 of the Tax Code of the Russian Federation.
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