Wealth audits - ERDOSDR

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Wealth audits

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The most common cause of wealth audits are that expenditures exceeded the subjects income of and its reported revenues to the tax authorities.

Nowadays all serious volume transactions are monitored and detected by the NAV. Just think of the increasing use of online cash registers, credit card payments, mandatory reporting of suspicious transactions or money laundering, financial reporting disclosure, motor vehicles transfer records, property transfer records, and those recurring monthly tax return for that are subject to the payment of wages or other regular business income.

The tax authorities only need to set the computers to see if the persons disaggregated revenue and expenditure show a negative number, and it will manifest. Above a certain level it may have already been the subject of the investigation order.

The application of the wealth tax audit firstly listens to the taxpayer, and mainly wants to know what was the income source to cover the higher spending. The statement is reviewed and will only be accepted if appropriate. The undeclared amounts are taxed, even under the rules of a tax gap.

In one case, a loan or a gift was the statement that was relied upon. The tax authority contacted the giver, who acknowledged the gift-giving, in fact, it could prove coverage, because from he relocated from abroad settled at home and his imported assets declared to the customs authorities proved many times greater than that gift amount. Yet the statement was not been accepted because the giver could not confirm the foreign currency conversion, and yet the gift was paid in forint.

In order to avoid these and similar situations it may require a more knowledgeable assistance to taxpayers in respect of their income and to be able to legally prove it.

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