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Tax Agency Audits: Duration and Strategies for Faster Resolution

How Long Do Italian Revenue Agency Audits Last?

When it comes to the duration of audits conducted by the Italian Revenue Agency, it all depends on the type of verification being carried out.

Income Tax Declaration Audits

For instance, in the case of income tax declarations, the general rule is that audits can cover a period of up to 5 years if they concern expenses for which documentation must be retained for a five-year period.
However, in the case of a failure to declare income, the Revenue Agency can conduct audits dating back up to 8 years.
Specifically, tax assessments must be notified by December 31 of the seventh year following the year in which the declaration should have been filed.

Reducing Audit Timeframes

There is a way to reduce audit timeframes, as outlined in response to query no.
404 published by the Financial Administration on August 2, 2022.

According to Article 3 of Legislative Decree No.
127 of 2015, individuals may be eligible for a two-year reduction in the audit timeframe if they ensure traceability of payments received and made for transactions exceeding €500, as established by the Minister of Economy and Finance.
This reduction does not apply to individuals engaging in transactions specified in Article 22 of Presidential Decree No.
633 of October 26, 1972, unless they have opted for the provisions of Article 2, paragraph 1, of the decree.

Payment Traceability and Audit Timeframe Reduction

In order to qualify for the two-year reduction in the audit timeframe, individuals must make and receive payments via:

  • bank or postal transfer;
  • debit or credit card;
  • bank, cashier’s, or postal check stating non-negotiability.

It’s important to note that if a taxpayer has made or received even a single payment through methods other than those specified above, the audit timeframe reduction does not apply for that tax year.

Reduction Criteria Clarification

In response to query no.
404, the Italian Revenue Agency clarifies that individuals may still qualify for the audit timeframe reduction even if payments are made through instruments that are technically equivalent to those listed in Article 3 of the implementing decree, as long as they meet the same traceability requirements.

Additional Payment Methods

Additional payment methods that may still make individuals eligible for the audit timeframe reduction include:

  • RIBA (Bank Receipt): a financial instrument used in business management where the creditor declares the right to receive a sum from the debtor against an invoice;
  • MAV (Payment by Notice): a standardized interbank collection procedure via payment slip, facilitating reconciliation for the creditor’s bank and the creditor for payment processing across different banking institutions.

For more details, refer to response no.
404 attached.

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