TAX ERRORS 5 December 2022

I. Introduction

Error refers to the actions that show the existence of an illegal transaction and that need to be corrected by the administration. Tax errors are unlawful transactions originating from the taxpayer or the administration (Tax Office), which we encounter in the following process from assessment to tax collection. The emergence of the said errors may be due to the complex and technical aspects of the taxation phenomenon, or the legislation structure that is subject to frequent changes and the inadequacy of the legislation in terms of content. In addition, errors arising from the incomplete or narrow interpretation of the laws by the tax office or the taxpayer can also serve as an example for this scope.

II. What is Tax Error?

It is the calculation and taxation errors that may result from the tax administration or the taxpayer, who are the parties to the tax, that cause the tax to be collected less or more than it should be paid.

Tax Procedure Law (TPL) article 116: Tax error is the request or collection of unjustified excess or under-tax due to errors made in tax-related calculations or taxation.

In taxation, taxpayers are bound by their declarations, they cannot object to their declarations, but tax errors are an exception to this.

The concept of tax error is included in Articles 116 and 126 of the TPL.

Elements of Tax Errors

• Making the Error by the Tax Administration or the Taxpayer
• Existence of an Unjust and Mandatory Transaction
• Unlawfulness
• Requesting or Collecting Excess or Incomplete Taxes as a result of Unfair Transaction
• Unfair Transaction Being One of the Errors Enumerated in the Law

III. What Are Tax Errors and How Are They Classified?

Tax Errors are regulated in Articles 117 and 118 of TPL. The legislator has classified the tax error in two different ways as Calculation Errors and Taxation Errors.

Account Errors

Accounting Errors regulated under Article 117 of the TPL are simple errors that result from mathematical errors in the declarations or erroneous deductions and affect the tax amount. Calculation errors in the aforementioned Law; tax base error, error in tax amount and tax duplication.

• Base Error

Article 117/1 of the TPL; It is defined as “incomplete or over-indicated or calculated the figures or deductions pertaining to the tax base in the tax declaration, accrual slip, notice, inspection report and decisions”.

Base error; It refers to the situation where the figures or deductions related to the tax base in the taxation process, declaration, accrual slip, notice, tax inspection report and decisions are under or over shown or calculated.

• Error in Tax Amount

Article 117/2 of the TPL; ‘’Error in Tax Amount’’ is defined as “incorrect application of tax rates and tariffs, deductions not made or made incorrectly, under- or over-calculated or displayed tax”.

The tax base is determined based on the taxable event, and after the determination of the tariff to be applied to the tax base, the amount of tax to be paid is calculated. Tax tariffs are generally regulated as rates, but in some taxes, for example stamp duty, they can be determined in fixed amounts. Errors in the amount arise as the wrong application of tax tariffs and rates to the base, failure to make deductions when it should be done, or wrongly levying the tax, thus levying the tax in excess or understatement.

• Duplicate Tax

Article 117/3 of the TPL; It is defined as "requesting or receiving tax more than once on the same tax base for a certain taxation period in the application of the same tax law." The point to be noted here is that double taxation is a situation that takes place in the field of domestic law, and it is not related to the concept of double taxation, which means that more than one state subject the same person to tax more than once for the same tax issue. In order for the tax process to be deemed erroneous due to the repetitive tax application, all of the elements of taxation period, base and tax subject must be the same. The simplest example of this situation; It is the payment of the taxpayer both by himself and by his accountant.

Taxation Errors

Taxation Errors regulated within the scope of Article 118 of the TPL can be defined as assessment errors in the determination of tax liability. In the aforementioned law, taxation errors are regulated as error in the person of the taxpayer, error in the liability, error in the subject of the tax and error in the taxation or exemption period. The most common tax errors during tax transactions are the errors made while issuing the tax return, determining the tax base and during the tax assessment.

• Error in the Person of the Taxpayer

Article 118/1 of the TPL; It is defined as “the request or receipt of a tax from another person instead of the main debtor”. Taking tax from wrong taxpayer due to name similarity can be given as an example.

• Error in Liability

Article 118/2 of the TPL; It is defined as “the demanding or collection of tax from persons who are not explicitly taxable or exempt from taxation”. An example of this is the tax-exempt tradesman enterprise stipulated in Article 9 of the Income Tax Law (ITL), excluding it from this scope and taxing it like any commercial enterprise.

• Error in Subject of Tax

Article 118/3 of the TPL; It is defined as "the demanding or receiving of tax on income, wealth, material, assets, documents and transactions that are not explicitly subject to taxation or are exempt from taxation." In practice, taxation occurs in transactions that are exempt from taxation.

• Error in Taxation or Exemption Period

Article 118/4 of the TPL; It is defined as "the taxation period to which the sought tax is related is shown incorrectly or the period is underestimated or overestimated".

The emergence of these errors is regulated within the scope of Article 119 of the TPL. Tax errors can be discovered in the following ways:

• The relevant officer finds or sees the error,
• Finding the error as a result of the examinations made by the senior officers,
• Revealing the error during the inspection,
• Revealing the error during the tax inspection,
• In case of detection together with the taxpayer's application.

IV. CONCLUSION

The subject we deal with belongs to a dynamic area where unilateral actions of the administration are intense and there are conflicts of opinion before the legislation and practical applications. In this context, it should be noted that it is very important for taxpayers to get help from experts in the field, both in administrative proceedings and in the judicial process, in order to prevent loss of rights.