Tax code 1631 for credit compensation: what it is, what it is for and how to fill out F24

Tax code 1631 is used to offset a credit accrued towards the Treasury by the tax withholding agent who provides tax assistance.
Have you ever needed to offset taxes and duties to be paid with credits claimed from the Revenue Agency? In this case you may find yourself in the position of having to use the tax code 1631 called "Sums by way of state taxes reimbursed by the withholding agent following tax assistance – art.
15, paragraph 1, letter.
a), Legislative Decree no.
175/2014".
Tax code 1631 is used by employers who pay advance or final withholdings relating to the compensation paid to workers and collaborators and recognize any refunds to workers.
But let's see how it works.
Tax code 1631 What is tax code 1631 and what does it refer to What is it for and when is tax code 1631 used Tax code 1631: who uses it and where to enter it F24: how to fill it in with tax code 1631 What is tax code 1631 and what it refers to The IRS has always looked for a way to simplify collection and above all to be certain of being able to achieve the collection itself while reducing tax evasion.
One of the simplest ways to achieve this goal is to place the obligation to pay taxes on those who have little interest in evading those taxes.
Consequently, employers in most cases act as withholding agents and calculate the gross salary of the worker, but do not pay it all, in fact, they pay a portion of the salary to the treasury and these are taxes that they should pay workers.
At the same time, the withholding agents pay the workers any refunds or sums that they must otherwise receive from the Treasury, for example supplementary treatment.
With regard to these sums advanced by the employer, credits are formed which employers/tax withholding agents can use to "pay" the taxes owed by them by offsetting the tax credits.
read also Tax code 1701 supplementary treatment: what it is, what it is for and how it works What is tax code 1631 for and when is it used? Tax code 1631 is reserved for tax withholding agents to recover credits due from the Treasury through compensation.
Article 15 of Legislative Decree 175 of 2014 (Simplifications Decree) establishes that the withholding agent recovers: the sums reimbursed to employees in relation to the liquidation statements of the 730 forms with the compensation in the F24 Form; payments of withholdings or substitute taxes made in excess of that due, always offset in the F24 Forms by subsequent payments.
Among the tax codes to be used is code 1631.
With tax code 1631, tax withholding agents therefore recover the credit amounts accrued for the tax assistance activity provided to workers and collaborators.
The taxes that can be offset are: income taxes; withholdings on income from work; VAT; the regional and municipal additional income tax; chamber of commerce rights; Imu and Tasi; Tax code 1631: who uses it and where to enter it The tax code 1631 must be used correctly.
Remember that there are two types of compensation: horizontal and vertical.
Horizontal compensation allows you to offset an accrued credit even with taxes and contributions of a different nature than what gave rise to the credit.
Vertical compensation occurs when a tax credit is used to offset the same type of tax, for example a VAT credit is used to offset a VAT debt.
This distinction is important because there are limits to horizontal compensation with the F24 model.
Compensation is free for amounts up to 5,000 euros.
Any excess, compared to the threshold, can be compensated starting from the tenth day following the day of submission of the declaration and subject to issuing the 'conformity visa' by the persons authorized to do so.
We leave the limits to horizontal compensation to further study.
Further limits will come into force starting from 1 July 2024.
read also Stop tax compensation with F24, the new limits of the Revenue Agency F24: how to fill it in with the tax code 1631 The tax code 1631 must be used in the F24 form, the code 1631 must be inserted in the "Treasury" section, in the first column, dedicated to the tax code.
Here are the instructions for completing the F24 form with the tax code 1631.
The "installment/region/prov/month" section must not be filled out.
The tax year in which the credit was accrued must be entered in the "reference year" section.
The "debit amounts paid" section must not be filled in.
The credit amount must be entered in the "compensated credit amounts" section.
The sum of the debit amounts indicated in the Tax Section must be indicated in the "TOTAL A" section.
Do not fill in if there are no debit amounts present.
In the "TOTAL B" section, the sum of the credit amounts indicated in the Tax Section must be entered.
In the “+/-” section indicate the – sign if TOTAL A is less than TOTAL B otherwise indicate the + sign.
In the “BALANCE (A – B)” section indicate the balance (TOTAL A – TOTAL B) The other sections do not need to be completed.
read also Form F24: how is it filled out? Practical guide with instructions