Tax

Administrative disputes, tax audit, settlement, and lawsuits
Attestation Services Tax Refund Tax Disputes

Tax Disputes

Tax disputes can arise from various administrative actions or letters inviting explanations from the tax authorities. Failure to respond appropriately and timely to these communications can lead to a tax audit and ultimately a tax lawsuit.

Administrative Disputes

Mismanaged processes during tax office applications can take much longer to resolve and become more costly. Therefore, resolving issues before they escalate is crucial. Resolving disputes at the administrative stage is easier than during an audit. At this stage, it is essential to research similar opinions from the authorities, determine the tendency of these opinions, and request new opinions if necessary. Failure to comprehensively present the disputed issue, incorrect or incomplete representation of the taxpayer, and obtaining incorrect opinions can lead to unfavorable outcomes. Additionally, knowing the potential results of actions taken at this stage can provide a strategic advantage. Proper management and resolution of disputes at the administrative level can save time and taxes.

Some common sources of administrative disputes include:

  • Delays in the deferment or cancellation of procedures by the tax authorities
  • Issuance of payment orders without considering offsetting petitions
  • Failure to provide a "no debt" certificate
  • Failure to respond to refund deficiency letters in time, leading to a fall in the refund claim
  • Absence during on-site inspections
  • Reclassification of suppliers of goods or services as requiring special provisions, necessitating VAT corrections for these purchases
  • Incompatibilities between industrial registry certificates, capacity reports, and activity codes
  • Failure to track or respond to e-notifications in time
  • Imposing liens on bank accounts
  • Excessive lien applications beyond the debt amount
  • Failure to change the debt guarantee
  • Continuation of lien applications despite payments

Tax Audit and Settlement

Some disputes unresolved at the administrative level are referred for tax audits by the authorities. Taxpayers can be selected for audits even after administrative approvals, based on certain criteria by the Tax Inspection Board. The reason for an audit is often not due to a notification but due to certain algorithms triggered by the submitted declarations and financial statements. Availing of certain deductions and exemptions, or receiving invoices from certain individuals, can also trigger an audit. Therefore, correct application of deductions and exemptions is crucial.

You can find detailed information on what to pay attention to at different stages of a tax audit in our article "Tax Audit Guide," which answers many of your questions.

Settlement can occur as a result of a tax penalty notice issued by the authorities or as a result of an audit. Before entering into settlements, it is important to know the limits of tax and penalty reductions by the authorities, understand standard penalty reductions, and foresee what can and cannot be achieved in a settlement. Evaluating the potential outcomes together when the dispute is taken to court is necessary. The strategic decision on whether to take the dispute to judicial authorities is largely made at this stage. Therefore, obtaining the right support before, during, and after the settlement is vital. For more detailed information on settlement, please refer to the section on settlement rights.

Tax Litigation Process Management and Tax Consultancy

After the final tax penalty notice, if the settlement phase is also passed, the lawsuit process in tax disputes begins within 30 days. Before filing a lawsuit, it is essential to fully understand the consequences of losing the case. There is no such thing as 100% winning or losing any case. The most important thing to remember during the lawsuit process is that each case is a unique event, no matter how similar they may seem. During the lawsuit process:

  • The case must be filed within the statutory period.
  • The chronological presentation of the event in the lawsuit petition should be clear and straightforward.
  • The tax law implications of the disputed issue should be thoroughly examined.
  • Attention should be paid to the hierarchy of legal norms.
  • Compliance of each application with notifications, private rulings, and internal circulars should be checked against the law and the constitution.
  • The legislative intent behind the law should be considered.
  • Previous judicial decisions related to the issue should be followed.
  • Familiarity with the language of the judicial body is necessary.
  • No aspect should be left incomplete in the lawsuit petition; unnecessary repetitions and irrelevant matters should be avoided.
  • Adequate responses should be provided to the defenses of the administrative lawyers, leaving no room for ambiguity.

In short, the entire process should be managed correctly. Another point to remember is that after the first instance court decision, there are appeal and cassation stages depending on the size of the case. Unfortunately, the administration does not abandon the case without exhausting all judicial processes if it loses. The case must be based on solid evidence and legal grounds. For more detailed information on litigation process management and tax consultancy you may contact us.