The Federal Tax Service began to use new tools to collect tax debt

The Federal Tax Service makes extensive use of high-tech tools to collect tax debts. One of them is a digital financial analysis of the debtor’s activities. It allows you to discover what schemes the debtor uses to evade taxes and where his assets are being transferred. The second effective tool of the Federal Tax Service is the platform for debt restructuring, which has been working effectively for a year and a half. Its main task is to establish cooperation between the participants in the process in resolving tax disputes instead of confrontation and conflicts.

How does the Federal Tax Service act in case of bankruptcy of debtors

The total amount of tax debt written off for 2022 amounted to 173.5 billion rubles, according to the Accounts Chamber. The most common case is the write-off of debts that were deemed impossible to repay due to the insolvency of the legal entity after the completion of its bankruptcy. The second common story is that the court or bailiffs do not find any funds from the debtor. In addition, debts will be written off upon exclusion of a legal entity from the Unified State Register of Legal Entities and the death of a taxpayer. Lenders usually have to put up with this situation.

However, as reported by the Federal Tax Service, bankruptcy for the state treasury is becoming less and less hopeless. In 2020-2022, in usually unpromising situations when debtors go bankrupt, the federal budget was replenished by more than half a trillion rubles from bankrupts.

The dynamics of the ratio of write-offs to tax receipts is indicative. Over the past five years, the ratio of funds written off has improved four times. So, if in 2019 2 kopecks were written off for each ruble of taxes collected, then in 2020 this figure decreased to 0.88 kopecks per ruble, in 2021 – to 0.75 kopecks per ruble. Last year, the write-off reached 0.5%, that is, a mark of 0.5 kopecks per ruble of tax revenues. This is the minimum write-off value for the entire measurement period.

It should be emphasized that, unlike banks that use a guarantee or when issuing a loan, they often receive collateral from the borrower, and if he does not repay the loan, then the financial institution will be able to realize it by returning the amount of the debt, the Federal Tax Service is not such a protected creditor. This forces the Tax Service to apply the institute of recovery on indirect, derivative assets of debtors.

The court may establish that the loss of the ability to collect a debt from a legal entity was the result of abuse by people controlling the company. In this case, the debt from the company, which found itself without assets, can be written off and shifted to the citizens responsible for the insolvency of the organization through subsidiary liability. Among the options is, of course, a derivative collection of debts from the people to whom the business is transferred, in order to write off debts, including the timely seizure of assets that are enough to compensate for the damage caused to the state treasury.

In addition, the initiation of personal bankruptcy of beneficiaries brought to subsidiary liability is applied. At the same time, the mere fact of writing off the company’s debt does not always lead to the final loss of the possibility of recovering funds. So, if some property is found from the debtor, the debt will be restored, and the collection procedure will resume. More than 150 billion rubles of tax debts have been collected through the courts from citizens who organized schemes for the insolvency of companies over the past five years.

Digital Tools for Troubled Debt Collection

According to the statistics of the federal register of bankruptcy cases, 40% of debtors have zero bankruptcy estate – in such conditions, only an in-depth financial analysis of their work, and more often even a full-fledged financial investigation of the activities of the debtor and people associated with him, can help to tell about the reasons for the lack of sources of recovery.

This approach enables the Tax Service to identify areas for asset stripping and debt avoidance schemes. As a result of such an investigation, the Federal Tax Service develops a strategy for conducting a bankruptcy case, including the search for and enforcement of hidden assets by challenging transactions, bringing to subsidiary liability, recovering losses and damages. According to the law, the obligation to conduct such activities lies with the arbitration manager, but as a rule, it is not their actions that are effective, but the initiatives of active creditors.

The IRS has demonstrated many times how its “Integrated Debt Management and Administration System” (IDMS) works. The ACS makes it possible not only to show all the digital traces of the actions of the owners and management, but also to turn them into budget revenues. The conditions for the voidability of transactions, the collection of debts from citizens controlling the company are transferred in the automated system of the Tax Service into digital portraits of abuses, which are converted into tasks for inspectors. The ACS focuses the inspector’s attention on the procedural action that is most likely to lead to the repayment of the debt.

As a result, over the past five years, the percentage of satisfaction of applications of the Federal Tax Service of Russia on bringing to subsidiary liability among those considered was 86.4%. And according to other people, the results are two times worse – 42.2%.

An important feature of the “subsidiary” in the approach to recovery is that it is in favor of all creditors, and not just the one who filed the claim. As a result, conscientious creditors benefit from the participation of tax authorities in such cases. Here you can expect that the court will be given comprehensive information that fully describes the actions of the beneficiaries who caused damage to their counterparties.

Another important tool for improving tax discipline is the “Register of subsidiary defendants”. It has been working on the website of the Federal Tax Service since May 2023 in test mode. The service provides data on citizens involved in the organization of insolvency schemes for companies, when it is recorded in judicial acts. Conscientious firms, thanks to such a list, quickly and with less labor, identify potential counterparties with citizens who in the past deliberately evaded taxes or brought organizations to bankruptcy. Of course, such information could have been obtained before, but for this it was necessary to consistently study the file of arbitration cases, and not every subject has the resources for this.

The progress of vicarious liability

The subsidiary liability of persons controlling the debtor itself has come a long way since 1994: at that moment Article 56 was included in the Civil Code. True, there was only one clause in the clarification of the provisions of the law in the joint resolution of the Plenums of the Supreme Court of Russia and the Supreme Arbitration Court of Russia dated July 1 1996 “On some issues related to the application of the first part of the Civil Code of the Russian Federation” No. 6/8. At the initial stage, this mechanism for protecting the violated right was almost never used by creditors.

A decade and a half later, the situation began to change. In 2012, the Presidium of the Supreme Arbitration Court of Russia issued Resolution No. 9127/12 dated November 6, 2012, in which it clarified the issue of bringing the head of a bankrupt organization to subsidiary liability if he did not transfer accounting and (or) reporting documents to the bankruptcy trustee, transferred them not in full or such documents contained false information. In 2013, with the introduction of amendments to the bankruptcy legislation (Law No. 134-FZ of June 28, 2013), the approaches developed by judicial practice were consolidated, but with a bias towards bringing only the heads of debtor companies to subsidiary liability.

And only seven years ago, having reviewed the decisions of three judicial instances, the Supreme Court of the Russian Federation brought to subsidiary liability the Supreme Court of the Russian Federation as a beneficiary an individual who was formally in no way connected with the debtor (the Inkom LLC case). Thus, 2016 became a kind of starting point from which the era of removing corporate veils began.

In the following year, 2017, the bankruptcy law was brought into line with the current practice in the courts, including on the issue of bringing beneficiaries and owners of companies to subsidiary liability. In the same year, a mechanism was introduced to protect the interests of creditors of a legal entity excluded from the Unified State Register of Legal Entities: the right to file claims for bringing to subsidiary liability the controlling persons of inactive limited liability companies without initiating bankruptcy cases was given to their creditors.

The development of the bankruptcy law, the evolution of judicial practice aimed at suppressing illegal schemes, have increased the effectiveness of protecting the rights of unsecured creditors. As a result, today the Federal Tax Service of Russia successfully uses these tools to recover debts to the budget. Another mechanism is the recovery of damages from beneficiaries in criminal cases of non-payment of taxes, or recovery from citizens to whom the debtors’ business was transferred.

Restructuring as a way to repay debt

The damage from debt cancellation last year was the smallest in the last five years. The focus of the Federal Tax Service on encouraging legal entities experiencing financial difficulties to restructure their tax debt, that is, to change the deadlines for paying taxes to the budget, stimulates this process.

In cases where the chances of evading debt payments decrease, and the opportunities to restructure it increase, debtors are active in settling bad debts to the budget.

The Interregional Inspectorate for Debt Management (this is the name of the specialized federal center for working with problem debts of the Federal Tax Service) has been operating the Debt Restructuring Platform since April 1, 2022. It acts as a platform for reaching agreements with debtors to defer tax payments. When applying, debtors are invited to undergo a diagnosis of their financial condition. In the course of the analysis, risks are identified and disclosed, ways out of the crisis provided for by law are proposed.

Russian companies through restructuring in the first half of 2023 paid off tax debts for 19 billion rubles, which is almost one and a half times more than in the same period last year. And the total volume of settlement agreements for 2022 and the first half of 2023, which the Federal Tax Service concluded with debtors, reached 35 billion rubles.