THE TAX AUTHORITIES POWERS TO VERIFY- THROUGH THESE, THE INEXISTENCE OF OPERATIONS CAN BE DETERMINED EXCLUSIVELY FOR TAX PURPOSES. – Article 42 of the Federal Tax Code in its sections II and III establish that the tax authorities so as to verify that taxpayers, jointly responsible persons, or third parties related to them have complied with the tax regulations, and, should it be the case, determine the omitted taxes or the tax credits, as well as to verify the commitment of tax crimes, and to supply information to other tax authorities, have the power to: a) carry out an audit in their offices, for which they may request from the taxpayers, the jointly responsible persons or third parties related to them, that they provide the accounting books as well as the data, other documents or reports requested from them, in their domicile, establishments, in the offices of the authorities themselves, or through the Tax Drop Box, depending on the manner in which the request was carried out, so that the tax authorities carry out their audit, b) to conduct visits to taxpayers, their jointly responsible persons, or third parties related to them, and examine their accounting books, goods, and merchandise. To that effect, it is worth stressing that the term “verify” means “to confirm the veracity or exactitude of something”, for which reason it is clear that the powers to verify are the instruments which enable confirming if the taxpayer has fully complied with the tax regulations. On the other hand, from the concatenated relationship of articles 4 and 6 of the Federal Tax Code and their association with the doctrinal definitions of credit and tax it must be concluded that the private parties are obliged in principle to determine on their own the taxes they are forced to pay, those that are incurred as the legal or factual situations contemplated in the tax laws in force at the time they take place; this notwithstanding, the authority is provided with the legal means through which it can verify if the tax laws have been duly complied with. Indeed, the enforcement of the powers to verify is not limited to detect cases of noncompliance derived in the determination of the tax credit of the remiss taxpayer, but it implicitly carries the possibility for the authority to verify if what has been declared by the taxpayer effectively is real, that is, whether the legal or factual situations contemplated in the laws have taken place and if the examined subject have given them the correct tax effects. In this tenor it is evident that the tax authority may reduce evidential efficacy of supporting invoices, contracts and other related documents, only for the determination, refund, or credit of taxes, by issuing a resolution in which in a grounded and supported way, determining if the transactions that the taxpayer recorded and documented in its accounting books are real, and, should it be the case that the tax authority notice that the operations are inexistent, determine the non-existence of those legal acts, exclusively for tax purposes, without that implying the annulment of such acts for general purposes, but only to deny its value it the taxation realm.
VIII-P-SS-223 Administrative Proceeding N° 1560/16-25-01-5-ST/3503/17-PL-04-04.- Resolved by the Plenary of the Superior Chamber of the Federal Court of Administrative Justice, in session of January 24, 2018, by unanimity of 11 favorable votes – Reportin