Recently, a "Notice on Tax Matters" issued by a district tax bureau in Haikou City to a property company suddenly attracted widespread attention and heated discussion. The reason is that the document actually verified and collected the taxes of an enterprise 30 years ago and ordered it to pay within a specified time limit. This can't help but make many people wonder, "Can the tax authorities indefinitely pursue tax collection on non tax evading enterprises?" In this article, we discuss the issue of the tax recovery period together.

1、 The Tax Collection and Management Law specifies the applicable conditions for "three, five, and indefinite tax recovery"

（1） "If the taxpayer fails to pay or underpays due to the responsibility of the tax authority, a three-year recovery period shall apply."

The first paragraph of Article 52 of the Law of the People's Republic of China on the Administration of Tax Collection (2015 Amendment) stipulates that "If a taxpayer or withholding agent fails to pay or underpays tax due to the responsibility of the tax authorities, the tax authorities may request the taxpayer or withholding agent to make up the tax within three years, but may not impose a late payment fine."

Article 80 of the Detailed Rules for the Implementation of the Law of the People's Republic of China on the Administration of Tax Collection (2016 Revision) stipulates that the responsibility of tax authorities referred to in Article 52 of the Law on the Administration of Tax Collection refers to the improper application of tax laws and administrative regulations by tax authorities or the illegal enforcement of law.

According to the provisions of the Tax Administration Law and the Implementation Rules, if a taxpayer or withholding agent fails to pay or underpays due to improper application of tax laws and administrative regulations by the tax authorities or illegal enforcement actions, the recovery period is three years.

（2） "If the taxpayer or withholding agent fails to pay or underpays taxes due to errors such as miscalculation, a three-year or five-year recovery period shall apply."

"If the second paragraph of Article 52 of the Law of the People's Republic of China on the Administration of Tax Collection (2015 Revision) fails to pay or underpays taxes due to errors in the calculation of taxpayers or withholding agents, the tax authorities may pursue the collection of taxes and late payment fines within three years;"; Under special circumstances, the period of recovery may be extended to five years.

Article 81 of the Detailed Rules for the Implementation of the Law of the People's Republic of China on the Administration of Tax Collection (2016 Revision) stipulates that the term "errors in the calculation of taxpayers and withholding agents" mentioned in Article 52 of the Tax Collection and Management Law refers to non subjective and intentional errors in the use of calculation formulas and obvious clerical errors. Article 82 stipulates that the term "special circumstances" as mentioned in Article 52 of the Tax Administration Law refers to taxpayers or withholding agents who fail to pay or underpay, fail to withhold or underpay, fail to collect or undercollect taxes due to errors such as computational errors, and the cumulative amount is more than 100000 yuan.

According to the above provisions, if the taxpayer or withholding agent fails to pay or underpays taxes due to errors in the use of calculation formulas, obvious clerical errors, etc. that are not subjective and intentional, the tax authorities shall apply a three-year recovery period; If the accumulated tax amount exceeds 100000 yuan, a five-year recovery period is applicable.

（3） "Those who evade, resist, or defraud taxes shall be subject to indefinite recovery and collection."

The third paragraph of Article 52 of the "Law of the People's Republic of China on the Administration of Tax Collection" (2015 Amendment) stipulates that for those who evade, resist, or defraud tax, the tax authorities shall not be subject to the limitation of the time limit specified in the preceding paragraph in pursuing the collection of unpaid or underpaid taxes, overdue fines, or defrauded taxes.
This article is commonly referred to as "unlimited recovery for tax evasion". According to this article, if a person evades, resists, or defrauds tax, the tax authorities may pursue the collection of unpaid or underpaid taxes, late payment fines, or defrauded taxes without a limitation on the recovery period.

2、 The General Administration issued a document to supplement the application of the recovery period

In the tax enforcement process of pursuing the payment of unpaid or underpaid taxes by taxpayers, tax authorities often encounter situations that are not stipulated in Article 52 of the Tax Administration Law. Should the recovery period apply to this situation. The State Administration of Taxation has issued legal documents to further supplement the legal application issues during the recovery period.

（1） Legal Application of Unlimited Recovery of Unpaid Taxes

According to the Official Reply of the State Administration of Taxation on Issues Related to the Time Limit for Recovery of Tax Arrears (Guo Shui Han [2005] No. 813), "In accordance with the Tax Collection and Administration Law of the People's Republic of China (hereinafter referred to as the Tax Collection and Administration Law) As stipulated in other tax laws and regulations, taxpayers have the obligation to pay taxes according to law. "If a taxpayer fails to pay tax, the tax authorities shall pursue the collection according to law until it has been collected and warehoused. No unit or individual may be exempted.". The tax authorities have no limitation on the recovery period for tax payment. The provisions of Article 52 of the Tax Administration Law on the time limit for recovery refer to those cases where unpaid or underpaid taxes are not discovered within a certain period due to the responsibility of the tax authorities or taxpayers, and beyond this period, no recovery will be made. "For unpaid taxes that have been declared by taxpayers or have been investigated and dealt with by tax authorities, the tax authorities shall not be limited by the provisions of this Article on the recovery period, and shall pursue the payment of taxes indefinitely in accordance with the law."

After the issuance of this document, some tax authorities have interpreted it in practice as "all cases of unpaid or underpaid taxes except for Article 52 of the Tax Administration Law should be pursued indefinitely." However, the author believes that the key sentence of this document is "For unpaid taxes that have been declared by taxpayers or have been investigated and dealt with by tax authorities, tax authorities are not subject to the limitation of the provisions of this recovery period, and should pursue the payment of taxes indefinitely in accordance with the law." That is to say, This document is only for "unpaid taxes that have been declared by taxpayers or investigated and dealt with by tax authorities", and the tax authorities can pursue and collect them indefinitely. For example, "a taxpayer who has made a tax declaration to the tax authority but has not paid it for some reason, or a tax authority that discovers that the taxpayer has not paid or underpaid the tax within a three-year or five-year recovery period, but has not collected the tax for various reasons, may no longer be subject to the deadline regulation.". "If a taxpayer has not made a tax declaration at all, or the tax authorities have not discovered the non declaration within three or five years, as long as the taxpayer is not" "evading tax" ", the tax authorities should apply a recovery period.".

（2） "If the tax is not declared and does not constitute tax evasion, a three-year or five-year recovery period shall apply."

According to the Reply of the State Administration of Taxation on the Issue of the Time Limit for the Recovery of Undeclared Taxes (Guo Shui Han [2009] No. 326), "Article 52 of the Tax Administration Law stipulates that for those who evade, resist, or defraud taxes, the tax authorities may pursue the collection of unpaid or underpaid taxes, overdue fines, or defrauded taxes indefinitely. The situation where a taxpayer fails to make tax returns, resulting in non-payment or underpayment of payable taxes, as provided for in Article 64, paragraph 2 of the Tax Administration Law, does not constitute tax evasion, resistance, or fraud, and the period of recovery shall be in accordance with the spirit of Article 52 of the Tax Administration Law.", "Generally, it is three years, and can be extended to five years under special circumstances."

The release of this article has well solved the confusion about the application of Guo Shui Han [2005] No. 813 document in practice. As the author has stated, Guo Shui Han [2005] No. 813 refers to "the unpaid tax that has been declared by the taxpayer or investigated and dealt with by the tax authorities", and is not a case where the taxpayer has not declared and has not been identified as tax evasion. ".
At the same time, the author believes that the GSH [2009] No. 326 document also conveys the idea of the State Administration on the recovery period, that is, "Regardless of the reason for the taxpayer's non declaration behavior, as long as the behavior is not recognized as tax evasion, it should apply a three or five year recovery period."

3、 Application of Recovery Period in Judicial Judgment and Tax Enforcement

To help readers better understand and apply the above documents in practice, we will list recent cases where tax authorities or judicial authorities have applied the recovery period for readers' reference.
（1） The recovery period is applicable for obtaining false invoices or unspecified tax evasion

1. The recovery period applies to cases where the obtained deduction voucher is not compliant

Document name: "Tax Treatment Decision Letter" QSJSB [2022] No. 931

Excerpt: Your unit has obtained 138 special VAT invoices issued by a packaging container Co., Ltd. in Tianjin. The above invoice has been confirmed by the Tianjin Jinnan District Taxation Bureau of the State Administration of Taxation as a false invoice According to Article 9 of the Provisional Regulations of the People's Republic of China on Value Added Tax, "If a taxpayer purchases goods, labor services, services, intangible assets, or immovable property and obtains a VAT deduction certificate that does not comply with laws, administrative regulations, or relevant regulations of the tax authorities under the State Council, the input tax shall not be deducted from the output tax;" According to the provisions of the Announcement of the State Administration of Taxation on the Issue of Tax Collection and Supplementary Payment by Taxpayers by Falsely Issuing VAT Special Invoices (Announcement No. 33 of the State Administration of Taxation in 2012), "Taxpayers who obtain Falsely Issued VAT Special Invoices shall not be used as valid VAT deduction vouchers to deduct their input tax amount." The above-mentioned VAT Special Invoices obtained by your company shall not be used to deduct their input tax amount, but shall be transferred out as input tax amount of 2339316.23 yuan in July 2013, Supplementary VAT payment of 2339316.23 yuan

According to the second paragraph of Article 52 of the "Law of the People's Republic of China on the Administration of Tax Collection", "If the taxpayer or withholding agent fails to pay or underpays the tax due to errors such as miscalculation, the tax authorities may pursue the collection of tax and late payment fines within three years; in special circumstances, the recovery period may be extended to five years." Article 82 of the Detailed Rules for the Implementation of the Law of the People's Republic of China on the Administration of Tax Collection stipulates that "The special circumstances referred to in Article 52 of the Law on the Administration of Tax Collection refer to taxpayers and withholding agents who fail to pay or underpay, fail to withhold or underpay, fail to collect or undercollect taxes due to errors such as calculation errors, and the cumulative amount of taxes exceeds 100000 yuan." The above taxes have exceeded the recovery period, and will not be recovered in this inspection.

2. In the case of obtaining falsely issued special VAT invoices in good faith, the recovery period shall apply

Document name: "Tax Treatment Decision" (SSYJB [2001] No. 1998)

Excerpt from content:... There is currently no evidence that your company knows that the special invoice provided by the seller was obtained by illegal means. In accordance with the relevant provisions of the "Notice of the State Administration of Taxation on the Handling of Taxpayers Obtaining False VAT Special Invoices in Good Faith" (Guo Shui Fa [2000] No. 187), it is an act of obtaining false VAT invoices in good faith You should recover 144754.25 yuan of value-added tax, 10132.8 yuan of urban maintenance and construction tax, and 2895.08 yuan of local education surcharges that your company underreported and paid in 2015. According to Article 52 of the "Law of the People's Republic of China on the Administration of Tax Collection", the above-mentioned tax has passed the recovery period.

（2） If the taxpayer fails to file tax returns and does not constitute tax evasion, the recovery period shall apply

1. Judicial precedent applicable to the recovery period for failure to file tax returns

Document name: "Administrative Judgment" (2022) Qiong 97 Xingzhong No. 63

Abstract: Our court believes that:... From the provisions of Article 52 of the Tax Collection and Management Law and the recovery period specified in the Official Reply of the State Tax Administration Letter (2009) 326, it can be seen that although taxpayers should declare and pay taxes in a timely manner in accordance with the law, the tax authorities should also actively perform their regulatory and tax collection duties, rather than actively perform their duties, unless taxpayers have legal circumstances of tax evasion, tax resistance, and tax fraud, "If a taxpayer fails to file tax returns, resulting in non-payment or underpayment of tax payable, the tax recovery period for the taxpayer shall be limited by the statutory recovery period.". This is a legal provision and a requirement of administration according to law.

2. No stamp tax declaration has been made, and tax documents with a recovery period are applicable

Document name: "Tax Treatment Decision Letter" (Qing Shui Er Ji Chu [2022] No. 33)

Excerpt: You and Feng Moumou signed a "Cooperation Agreement" in 2014, and both parties agreed that you would invest 135 million yuan to purchase 50% of the equity held by Feng Moumou in Lianshan Zhuang Yao Autonomous County * * Mining Co., Ltd. (hereinafter referred to as "Dalongshan Company"). The "Cooperation Agreement" signed by you to transfer the equity of * * * company has not paid the stamp tax of 67500.00 yuan according to the "Property Transfer Certificate" It has been more than three years since you signed the "Cooperation Agreement" in April 2014 to incur stamp tax liability on the transfer of the above equity interests, and the time when our bureau found that you failed to fulfill the stamp tax declaration, we have decided not to pursue payment.

3. No individual income tax declaration has been made, and the tax documents for the recovery period are applicable

Document name: "Tax Treatment Decision" (Wu Shui Er Ji Chu [2020] No. 55)

Excerpts: 1. You signed the Equity Transfer Agreement with Zhou XXX in March 2010, and the equity income from your transfer of Anhui Wuwei County XXX Real Estate Co., Ltd. was 25.47 million yuan (payment amount: 3950 - loan repayment: 300 - original equity investment: 1103=25.47 million yuan). The individual income tax payable on the income from the transfer of equity is 5.094 million yuan, which has not been declared and paid. "In March 2009, you signed the Equity Transfer Agreement with XXX Holding Group Co., Ltd.,". The equity transfer agreement confirms that your 51% equity and equity holdings are 23.7 million yuan, and the income from the transfer of equity is 4.3 million yuan. The individual income tax payable on equity income is 860000 yuan, which has not been declared and paid. According to the provisions of Article 64 (2) and Article 52 of the Law of the People's Republic of China on the Administration of Tax Collection and the Reply of the State Administration of Taxation on the Issue of the Time Limit for the Recovery of Undeclared Tax (Guo Shui Han [2009] No. 326), these two taxes have passed the recovery period and shall not be recovered.

4. No corporate income tax revenue recognition and tax declaration has been conducted, and the tax documents for the recovery period are applicable

Document name: "Tax Treatment Decision Letter" JSYJGB [2022] No. 331

Extract: Upon inspection, it was found that on June 22, 2010, the People's Government of X Town, Wuqing District, Tianjin City paid 6 million yuan to Tianjin X Food Trading Co., Ltd. According to Article 52 of the "Law of the People's Republic of China on the Administration of Tax Collection", the existing evidence cannot confirm whether the amount should be taxable income of your company and whether income declaration and tax payment should be confirmed. The issue occurred from June 2010 to August 2019, when the case was filed for inspection. The period has been up to 9 years and has exceeded the five-year recovery period, so it will not be handled temporarily.

summary

Through the analysis of relevant legal documents and the enumeration of relevant judicial and administrative documents during the recovery period, we can see that: taxpayers who have not declared but have not been identified as evading tax, or taxpayers who have not paid or underpaid their taxes are in arrears that are not recognized during the recovery period, or taxpayers whose actions fall within the first and second paragraphs of Article 52 of the Tax Administration Law, should apply a three-year or five-year recovery period.

Recently, there has been a heated discussion about the behavior of a district tax bureau in Haikou City that approved the collection of taxes from a property company 30 years ago. Due to the lack of comprehensive information on the case, it is not possible to analyze in detail whether it is appropriate. However, it can be made clear that "whether the underpayment of taxes occurred during the recovery period" is one of the key points that should be noted in this case.