The Role of Tax Investigations

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Tax investigation agencies are departments of the country’s financial authorities, tasked with investigations in accordance with the tax laws. Their duties include the investigation of tax offenses, the determination of tax bases, and the detection and identification of unscrupulous tax cases.

They entail thorough investigations carried out by the relevant authorities to retrieve undercharged tax. In principle the tax authorities may carry out such an inquisition on suspicion of deliberate tax evasion actions by a tax payer or alternatively on account of routine sampling operations.

The investigators normally achieve these objectives through taxpayer interviews, physical visits to taxpayer’s premises. As well as tax audits, supplementary assessment, verification processes through third parties such as banks, and thorough examination of books and records.
 
To avoid suspicion or subsequent investigation, it is the prerogative of the taxpayer to inform the authorities especially the tax offices, the main customs offices/customs investigation offices. Or other authorities about any major inaccurate or incomplete tax information.

Subjective intention relates to tax evasion or avoidance acts committed intentionally, the attempt of evasion is punishable. Subjective intention points to more than simple negligence, it implies gross negligence.

It is common for foreign financial authorities to share tax related data for further review by domestic tax authorities. This applies to foreign tax established facts, such as deposits in Switzerland. The supply of information will assist the intergovernmental fiscal overviews.

Notaries and banks are required to report certain information, such as in the case of succession (inheritance tax), generally documented on the notary public, and other relevant tax related transactions. Under certain conditions, bank customers data acquired by the investigative authorities is scrutinized for any tax offenses. And it will all depend on the authorities as to how far the tax investigation may use the results.

Their inquisitive tentacles extend to information in newspapers (eg, finance related reports on natural or legal persons), internet (auctions on ebay, car exchanges). The tax authourities in some jurisdictions make use of web crawlers to sniff out any events, transactions which are thinned out systematically.

While in some countries police officers act on the orders of the prosecutor to review documents concerning a particular person or entity. Searches and seizures usually happen only because of judicial order.

As the officials of the tax investigation, their rights and obligations is entitled to the tax revenue system, they have a quasi legal ambiguous position. Their tasks includes the investigation of criminal tax matters and the determination of tax issues. However, they have no rights and duties of the police, unless they are justified in the Police Act.
 

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