Tax Audit, Dispute Resolution, and Tax Offenses
Scope
Tests audit procedures, taxpayer rights, appeals, penalties and offenses.
Core rules
- Tax audits may be desk-based or field-based and are generally risk-based.
- The tax authority must give notice and allow representation.
- The statute of limitations for assessment is generally 5 years.
- Penalties for underpayment are commonly 20% of the unpaid tax, plus interest.
- Taxpayers may appeal an assessment to the higher tax authority within 30 days, then to court.
- Serious offences may lead to criminal liability.
Worked example
An audit assesses MNT 10,000,000 of unpaid VAT. A 20% penalty = 2,000,000, plus interest. The taxpayer disagrees. It must file an appeal within 30 days of receiving the decision; paying the principal does not automatically waive the appeal right on the penalty. Missing the deadline usually ends the administrative appeal route.
Traps
- Ignoring the appeal deadline.
- Assuming payment ends the dispute.
- Failing to keep audit documents.
- Confusing penalties with interest.