2022 Income Tax Return: what to do in case of tax audits, rectifications and late submissions?

The Revenue Service cross-checks the data received from various sources, such as companies, employees, health professionals, and other service providers

The 2022 Income Tax season has come to an end, but at least 2 million Brazilians are still not in compliance with the Revenue Service. This figure represents the total of taxpayers who have been audited due to pending issues in their annual tax returns.

According to the agency, most irregularities pertain to omitted income or lack of information on dependents.

The Revenue Service cross-checks the data received from various sources, such as companies, employees, health professionals, and other service providers. Whenever a tax return is flagged due to inconsistencies in the information provided, it is submitted to a tax audit.

Below are some of the most recurring questions. 

How do I know if I am being audited?

Taxpayers can now check errors in their Income Tax returns and even act ahead to make rectifications before a notice of audit is issued by the Revenue Service. To perform this check, they must access the e-CAC website.

How do I get through a tax audit?

Once an error has been identified by the taxpayer, an amended return may be submitted (provided they have not been formally notified by the Revenue Service). Another option is to submit the documents for correction via e-CAC.

After a notice of audit has been received, further rectifications are no longer possible. In this case, a notice of deficiency is issued and the taxpayer will be subject to a fine. They may even be called upon to provide clarifications.

It should be noted that the fine is adjusted according to the Selic rate, and the longer the delay to settle the matter, the higher the fine will be. Thus, it is worth taking precautions to always check one’s tax situation as soon as the tax return has been filed.

I found a pending issue, but it is from a previous year. Is this possible? 

Yes, because the Federal Revenue Service cross-checks data from time to time. Thus, taxpayers may be held accountable for information provided over the last five years. For this reason, receipts, income statements and other tax-related documents must be stored and maintained during this period.

Read more: Revenue Office identifies differences between tax returns of companies and individuals 

How do I prepare an amended return?

An amended return replaces a previously-submitted tax return. You may file as many as needed, with only the most recent one being valid. 

Rectifications can be filed through the income tax software, the My Income Tax application (aplicativo “Meu Imposto de Renda”), or through the e-CAC Portal.

After the 5th amended return is filed, further rectifications should be made at a branch of the Federal Revenue Service of Brazil. If a taxpayer identifies the need to submit amended returns for previous years, they must download the software for the corresponding year.

What if I did not file my 2022 income tax return on time?

Failure to submit tax returns on time will result in a fine ranging from BRL 165.74 to 20% of the income tax due for the year.

This year, the deadline for submission of income tax returns was extended by 30 days, having ended on May 31.  If you still have not submitted your information, you should get organized to comply with your tax obligations. Check out a few tips on how to prepare your tax return here.