Legal aspects of tax payments by a third party

Chernyshenko Il'ya Gennad'evich ORCID: 0000-0003-4066-8446 Student, Financial University under the Government of the Russian Federation 105187., Russia, Moscow, Shcherbakovskaya str., 38 cheig@inbox.ru Other publications by this author

Federal Law No. 401-F of 11/30/2016 introduced by the legislator the possibility of paying tax payments by another person. Prior to the entry into force of this norm, de jure and de facto, the tax obligation had to be fulfilled by the taxpayer personally, justifying this by the fact that the tax obligation must be personalized, the payment of a tax payment by another person may be the creation of certain obstacles beneficial to taxpayers in the process of paying tax and in the exercise of tax control. In view of the numerous appeals of taxpayers to the central office of the Federal Tax Service of Russia (hereinafter referred to as the Federal Tax Service of Russia) regarding the legalization of such a possibility, the legislator nevertheless decided to introduce changes.

This legislative change can be assessed from two sides: from the side of the undoubtedly positive effect and the problems created. The positive effect is explained by the establishment of a new convenient and optimal way of fulfilling tax obligations, the focus on increasing the revenue item of the budget, and the effect of the problems created is the insufficient elaboration of such a mechanism and, in the opinion of the author of this article, an unreasonable and unfair (from the point of view of the principles of taxation and the tax system as a whole) consequence for the person who paid the tax for another a person, in the form of refusal to carry out the refund procedure, which, ultimately, will only be a complication of such a payment process.

Currently, the issue of paying tax by another person is sufficiently regulated by tax legislation and by-laws. These sources regulate the following legal relations of "intermediary" payment: what payments can be made for third parties, except for the tax payment itself, what subject composition should be in the process of payment on the side of the taxpayer and the person who paid the tax for him (hereinafter referred to as the third party), by what means the tax must be paid by another person, rules for filling out a payment document; use of the digital service "payment of taxes for third parties", cases (circumstances) of paying a tax payment for another person, organization of accounting for such payments.  

So, we note the key characteristics of the process of paying tax by another person, based on the analysis of the regulatory framework on this issue:

1) any tax may be paid by another person, including such types of payments as fines and penalties;

2) the subject composition assumes that there are no restrictions on persons who can be a taxpayer and thus a third party – on both sides there can be both an organization and an individual entrepreneur, an individual;

3) depending on the legal status of the taxpayer and a third party, the issue of the form of payment will be resolved: between individuals, an individual and an individual entrepreneur, individual entrepreneurs, both cash and non-cash payment is possible, in all other cases only a non-cash payment procedure is used;

4) the rules for processing payment documents when paying tax by another person (if there is no desire to pay using a single tax payment) include: mandatory indication of the INN and KPP of the prospective taxpayer, as well as data on the third person paying the tax; the presence of the purpose of the payment in order to fully identify the payment and minimize the risks of improper execution or non-execution tax obligations;

5) cases (circumstances) of payment of tax payments for another person (based on explanations of the tax authority and judicial practice) are recognized as: erroneous payment due to incorrect filling of the payment document; payment of the counterparty's tax on account of the obligation fulfilled by him; payment of the lender's tax on account of repayment of the loan amount; gratuitous payment.

It is worth noting that the listed circumstances are the basis for the organization of tax accounting of a payment received by another person, the need for tax accounting is obvious: various tax consequences follow from the chosen method of tax accounting (the possibility of recognition as an expense or income, or non-operating income for the taxpayer), or their absence will follow. It should be noted that the chosen method of tax accounting also affects the legal nature of the payment of tax by another person in accounting, namely: the formation of receivables or payables, or some kind of financial investment.

Thus, for the full and correct implementation of the payment of tax by another person, it is necessary to take into account many different procedures, requirements and restrictions that are fixed and described in various acts that have a legislative and advisory nature.

Let's move on to highlighting the problems associated with the payment of tax by third parties.

1.      Ambiguous interpretation and misunderstanding of the wording "other persons" regarding the payment of tax payments.

K.V. Lonshakov quite correctly connects this problem with the ambiguous definition of the legal status of a third person ^[6]. For example, what about the situation when insignificant amounts of tax payments were paid for other citizens by an employee of the tax authority? How legitimate was it from the point of view of the fulfillment of the tax obligation by another person in the absence of legislative information about what legal status such another person should have?

Currently, there are no restrictions for state civil servants, tax inspectors, regarding their payment of tax payments for other persons. But the condemnation of this tax inspector by his colleagues in artificially increasing performance indicators does not subside, which is the ground for the emergence of subjective accusations of abuse of authority by the tax inspector, paying taxes for a third party. This resonant story is an obvious embodiment of the problem of the lack of concretization of the concept of "other person" in terms of the performance of tax duties.

The absence of an explicit indication in the law who can be classified as other persons, and who is limited in paying tax payments for another person, will be able to minimize litigation, abuse, avoid ambiguity and ensure more efficient operation of the taxation system.

2.      The problem of distinguishing the institution of tax representation and the payment of tax payments for a third party. With the appearance of the novel in question, the figure of a third person paying tax payments for another person became similar to a tax representative.

The position of Polyakov V.A. is quite reasonable: in connection with the emergence of the possibility of involving a third party in the process of paying tax, it is necessary to reconsider the institution of tax representation ^[9]. After all, with the introduction of the novel, a third person has the opportunity to avoid compliance with the amount of formalities that are provided for when registering the powers of a tax representative. Thus, the legislator will soon need to rethink the existence of the institution of tax representation, possibly to facilitate the procedure of registration of powers on the example of the actions of third parties who pay taxes for another person, to minimize other administrative barriers. It is also possible to envisage the introduction of a new form of tax representation, such as proposed by V.A. Polyakov – "quasi-representation".

3.      The problem that we will begin to cover was partially mentioned earlier – the lack of a mechanism for returning a tax payment by the person who paid it to a third party in the tax legislation.

This situation is unfair, because a person who should not have paid the tax due to any circumstances, for example, an error in a payment order, cannot receive a refund of the money paid. Consequently, a person who has paid tax for another person, in fact, has no opportunity to get his money back, which, according to the author of the article, is an obvious gap in tax legislation.

Let's consider all possible ways of returning a tax payment by a person who paid for another, assessing their possibility of application in legal practice.

1. Through interaction with the person for whom they were paid (through interaction with the taxpayer). The situation when the taxpayer for whom the money is deposited applies to the Federal Tax Service with an application for the refund of the overpayment of tax or for the clarification of the payment is quite acceptable from the point of view of tax legislation, however, in practice this may become problematic if there are some unfavorable relations between the taxpayer and the person who paid the tax payment for him. In such a situation, the taxpayer may refuse to cooperate with the person who paid the tax for him, and not provide the necessary information for the refund of the tax payment to the tax authority. This will lead to the fact that the person who paid the tax will not be able to ultimately receive a refund of the money that was paid for another person.

2.      The second method was tried to justify and apply the court of first instance in the well-known case No. A18-2813/2021 [Resolution of the Arbitration Court of the North Caucasus District of 28.06.2022 N F08-4622/2022] in the case N A18-2813/2021. According to the court of first instance, territorial (interregional) tax inspections act as revenue administrators. It follows that the tax authority is not the owner, i.e. the final recipient of the funds listed by the Plaintiff. The position of the court was as follows: the return of payments mistakenly transferred to the budget should be carried out through the interaction of the Federal Treasury with the administrator of budget receipts through the provision to the administrators of budget receipts of documents on the operations carried out to account for receipts to the budget system of the Russian Federation. The courts of higher instances did not agree with this position, the decision of the court of first instance was canceled.

3. An appeal to the court with a claim for the refund of a wrongly paid tax payment as unjustified enrichment to the tax authority or directly to the taxpayer himself in the civil legal field. This method carries a lot of risks:

- unjustified enrichment is a situation where one side gains without a legitimate reason, and the other side loses something without a legitimate reason. In the context of a wrongly paid tax, the taxpayer mistakenly overpaid the tax and loses his money without a legitimate reason. However, the tax authority did not receive this benefit without a legitimate reason. The taxpayer had to pay this tax, so the tax authority cannot be considered to have received a benefit without a legitimate reason. Thus, the wrongly paid tax cannot be considered as unjustified enrichment, since all the necessary signs of unjustified enrichment are not fulfilled.

- it is also likely that it will not be possible to move into the civil legal field, since the institutions of civil law cannot be applied to property legal relations based on administrative or other authority subordination.

4.      The Tax Code prohibits the refund of a tax payment by a person who paid it for another person, however, the legislator has not established direct prohibitions on the offset of overpaid tax against a future tax obligation or on clarifying the requirements for it.

Although the legislator has not established direct prohibitions on offsetting the overpaid tax against the future tax liability or on clarifying the requirements for it, the tax authorities indicate in their explanatory letters that such actions are prohibited. These explanatory letters are of a recommendation nature, but the tax authorities can refer to them in case of disputes with taxpayers.

This method is not effective, since it consists in the fact that a taxpayer may not be considered authorized to offset the overpaid tax against a future tax obligation or to clarify the requirements for it if he paid tax for another person regarding the content of explanatory letters.

5.      Return the wrongly paid tax payment as accounts payable.

This method would be effective in the case of the extension of civil legislation to the performance of an obligation by a third party, including a tax obligation. In such a case, the rights of the creditor under the obligation would be transferred to the third party who fulfilled the debtor's obligation, i.e., by virtue of civil legislation, the taxpayer's debt obligation to a third party would arise. But this requires the application of a third party during the statute of limitations on tax disputes for reimbursement of costs from the taxpayer organization for which the tax was paid, otherwise, the amount paid will be recognized as gratuitously received by the taxpayer.

This method, although it looks effective and reasonable, is also risky. Such an approach can lead to additional difficulties in the settlement of tax obligations, since the procedures and procedure for the refund of tax payments are regulated exclusively by tax legislation, and not by civil legislation. And the sign of accounts payable will also be blurred, since the refund of the tax payment paid by mistake is a method of mutual settlements between the taxpayer and the tax authority, and not a third party.

According to the author of the article, the consideration of the legal instruments applicable to this situation is not exhausted. You can also consider such a mechanism as tax accounting. If the tax was mistakenly paid for another person, then the refund should have been carried out with the help of an act of reconciliation of settlements with the budget. To do this, it is necessary for the third person who paid the tax to immediately inform the tax authority about this, and then get advice, provide the tax inspectorate with all documents confirming the facts that the tax was paid for another person and it was paid in error.

At the same time, it is possible to stop the movement of money on the taxpayer's account in accordance with the requirements of the tax inspectorate (they may be temporarily frozen on this account). The requirement to suspend the movement of these funds in the taxpayer's account must be fulfilled by the bank.

After all the necessary documents are provided to the tax inspectorate, and all the necessary checks are carried out, the funds that were suspended on the taxpayer's account will be returned to the account of the person who mistakenly paid the corresponding tax payment.

This method is comparable to the early practice of the tax authority described by K. Lonshakov in ^[6]. In case of detection of an erroneous transferred tax payment due to the fulfillment of another person's tax obligation, the tax authority entered information about the receipt of the payment in the statement of outstanding documents, further, the funds paid to the budget of the budgetary system were subject to refund, and the tax obligation was recognized as unfulfilled.

Thus, the tax legislation should provide for a mechanism for returning a tax payment to the person who paid it for another taxpayer, both mistakenly and of his own free will. The legal instrument should be chosen by the legislator so that it does not contradict the essence of the tax legislation, its current norms.

Zakharova O.A. considers other problems related to the payment of tax by a third party, which may well occur in law enforcement practice ^[3]. For example, how to minimize the substitution of concepts regarding the institution of tax representation and "other persons", how to clarify or refund the tax paid for another person if the amount of funds ultimately did not reach the budget for reasons beyond the control of a third party and the taxpayer, for example, in the event of a software failure? These and many other questions still remain unanswered and are not the subject of consideration in the tax legislation and in the advisory acts of the Federal Tax Service.

The idea of fulfilling the obligation to pay a tax payment in connection with the introduced changes has changed dramatically since 2016. But the novel that has appeared is an insufficiently developed legal mechanism, in this regard, the author of this article believes that the work of the legislator should be continued, aimed at making additional changes to the tax legislation in order to eliminate the contradictions that have arisen and explanatory work of tax authorities to ensure transparency and certainty of the application of the rules regarding the procedure and procedure for paying taxes by third parties in avoiding the appearance of an increasing number of legal nuances.