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Tax Collector Aggressive But Not Very Helpful

by Garland M Baker on December 6, 2004

‘Come back in December,’ employee says

This article was very frustrating to write. Nothing at the Web sites of Tributación Directa or Hacienda worked. Tributación Directa is the name of Costa Rica’s tax authority, and Hacienda is the treasury department. The search engines on both sites are worthless.

Trying to find a simple schedule of this month’s important tax deadlines was fruitless. One is directed to the same page repeatedly saying the webmaster is sorry nothing works. A great help when you want to pay your taxes.

A personal visit to Tributación Directa was just as disappointing. When trying to request a brochure or even a simple sheet of paper with the tax due dates a woman said: “Come back in December.”

All this disorganization may be a result of the Tributación Directa’s move to a gorgeous new building in Barrio Don Bosco close to Jardines de Recuerdo, Costa Rica’s most widely known
funeral parlor. This is an appropriate place for a tax authority because death and taxes are the only two things that we can be certain of in this lifetime.

Everything worked much better when the tax collectors were in a dumpy old building next to the courts in San José.

However, this does not mean the tax collection process is as disorganized. On the contrary, Tributación sent out an army of personnel this year to ensure the correctness of the data on its computers. Everyone who is working or has a company is required to be inscribed with the tax authority, and it is mandatory that the data submitted is always correct. If it is not, one can be fined up to 503,400 colons or $1,120 dollars.

This researcher, by accident, came across a tax directive, Directriz N° CP-01-2003 of March 5, 2003, called the Plan de Control Masivo de Omisos Declaraciones Informativas or Massive Plan to Control Tax Information Declarations and Omissions.

This plan sets out the procedures to track down all those companies and individuals who have not provided Tributación with tax information forms. These forms, 150, 151, and 154 are the way the tax people are catching cheaters. The forms were due Nov. 30.

These information forms are based on a system of checks and balances taught to Tributación Directa by the U.S. Internal Revenue Service.

Form 150 is where employers report withholding on their employees and it is balanced and compared with what employees file. Form 151 is where businesses report revenue from other businesses, purchases from suppliers and professional services and balances with other companies and individuals reporting the same information.

Form 154 is the form used by credit card issuers to report activity of their affiliates and balances with what those affiliates report as revenue to the tax authority.

If something doesn’t balance in a cross-check on one of these forms with what is reported for a business or an individual, a visit by the tax police is almost guaranteed, and a fine a certainty.

The good news is, if you haven’t done something correctly you can “fess up” and, using words from the tax code, “voluntarily and spontaneously” correct any error or omission. By doing so, any fine is reduced by 70 percent.

It usually takes the tax computers two months into the New Year to crunch the numbers necessary to do the cross-checking and catch violators.

This massive plan to catch tax dodgers using tax information forms is Costa Rica’s way to increase tax revenue. Only about 3 percent of the companies are ever audited because Costa Rica just does not have the tax infrastructure to do more – yet.

Every year the tax authority is becoming stronger and stronger and hiring and training more and more tax police. If your tax house isn’t in order in Costa Rica, you should get it in order this year to avoid expensive tax problems next year.

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