Federal Revenue Office identifies differences between tax returns of companies and individuals

Errors in corporate tax returns for 2018 create issues for individuals

The Federal Revenue Office recently announced the results of a Tax Audit operation of Legal Entities, which analyzed signs of insufficiency in the provision of information for 2018. The action may affect individuals connected to the 16,135 notified companies.

Differences were identified in the Corporate Income Tax Return (IRPJ) and in the Social Contribution on Net Income (CSLL) of these companies. The total indication of insufficiency is approximately BRL 2.5 billion for the entire country.

Learn more about this operation here.

Why can individuals be affected?

The change in the amounts of profits and taxes paid by companies directly impact the Withholding Income Tax Return (DIRF). It is issued by the withholding agent to inform the Federal Revenue Office of the amounts withheld from payments to third parties, including employees.

What happens is that employers often change the DIRFs and do not communicate individuals about the need for them to adjust their income tax returns as well.

As the crossing-checking of data is electronic, when reprocessing the companies' DIRFs, the Federal Revenue Office immediately finds differences from the income tax returns already submitted by individuals. And when inconsistencies are identified, taxpayers are fined.

Individuals: How do I know if I have been affected?

Some individual returns for calendar year 2018 already have pending issues (even if they have previously been indicated as processed and even the refunds have been credited).

The pending issue generates Tax Release Notification “0211” and taxpayers must pay a fine and overdue payment interest.

The taxpayer must consult the processing status of DIRPF 2019 (calendar year 2018) to check if there are any inconsistencies in their return.

It is worth highlighting that these divergences are identified when the legal entity makes the correction of amounts before the Federal Revenue Office.

Individuals must also ask the company for a new Income Report to properly adjust the changed amounts and settle any pending issues.

Solutions for individuals

DPC's individual service center guides taxpayers in all steps and stages of the Individual Income Tax return (IRPF), including complex situations, exceptional cases, and amendments. Count on this support: dpc@dpc.com.br.