Tax disputes are disputes that arise from time to time between taxpayers and the tax administration. These disputes may arise due to various reasons. Situations such as suspicion of tax loss, declaration errors, and incorrect tax practices are among the main reasons that lead to tax disputes.
One of the methods used in resolving tax disputes is the institution of invitation to explanation. Invitation for explanation is a notification sent by the tax administration to the taxpayer in order to determine whether there are any errors or omissions in the taxpayer’s tax return or taxable transactions before the tax audit begins.
When to Invite for Explanation?
• Before starting the tax audit,
• Before being referred to appreciation commissions,
• An invitation for explanation may be made by third parties before a notice is made.
What Should Be Considered When Calling for Explanation?
• The taxpayer has the right to explain in writing that there is no error or omission in his declaration or transactions within 15 days after receiving the notification of invitation to explanation.
• If the taxpayer accepts in his explanation that there is an error or omission in his declaration or transactions, he can make the correction within this period.
• The taxpayer may not provide explanations or admit that there are errors or omissions in his declaration or transactions. In this case, the tax administration may initiate the necessary investigations.
Advantages of Invitation to Explanation
• Taxpayers have the opportunity to correct their mistakes and avoid penalties before undergoing a tax audit.
• Communication and cooperation between the tax administration and the taxpayer increases.
• The number and cost of tax disputes are reduced.
Disadvantages of Inviting for Explanation
• Taxpayers do not have the option of not providing explanations or admitting errors.
• Taxpayers may be subject to tax audit based on the statements they make in their statements.
Important Issues Regarding Invitation to Explanation
• It would be beneficial for taxpayers who receive an invitation for explanation to learn their legal rights and obligations by consulting a tax expert.
• Taxpayers should avoid making untrue statements in their explanations.
• Taxpayers must provide documented explanations and corrections.
