How does the tax office select taxpayers for audit? We explain the details

On what basis does the tax office select taxpayers for verification?

Zbigniew Stawicki indicated the considerations followed by the KAS authorities when deciding to undertake verification activities or initiate a tax audit in response to the parliamentary interpellation (no. 11190) by Janusz Kowalski.

The Deputy Minister of Finance and Deputy Head of the National Tax Administration admitted that the National Tax Administration verifies tax settlements in various modes: verification activities, tax inspections, customs and fiscal inspections and preparatory proceedings in fiscal penal cases.

Which mode is triggered – informal screening activities or formal inspections or proceedings – depends on risk analysis. The authorities make it on the basis of such tools and IT systems as e.g. STIR (thanks to it, it is possible to control flows on bank accounts), as well as on the basis of data from taxpayers (e.g. uniform control files, tax returns), available external sources (e.g. KRS and CEiDG databases), as well as signal information (i.e. so-called reports).

— If the result of the risk analysis shows significant irregularities and there is a suspicion of generating large losses for the state budget, customs and fiscal inspections are initiated. Whereas if the irregularities are minor, tax audits or verification activities are initiated – explained Minister Stawicki.

Why are there so many checking activities and what does KAS check in this mode?

Data from the Ministry of Finance show that the number of tax audits has been decreasing for several years, and the number of verification activities remains at a similar, high level.

Last year, tax authorities carried out 2.4 million verification activities, and – as we informed earlier – there were… 9,861 tax audits to be precise.

This trend has been going on for several years. Why?

As Zbigniew Stawicki replied, the Ministry of Finance limited the inspections and replaced them verification activities that are less formalized and enable them to be conducted without the taxpayer's participation. The increase in the number of verification activities is the result of the fact that checking activities allow for faster and more effective detection of typical errors and irregularities. Of course, these are cases that do not require the initiation of tax audits.

“In particular, verification activities are undertaken in cases where when tax irregularities result from unintentional errors of taxpayers or involve smaller-scale depletions, i.e. in cases where initiating a more complicated and extensive control procedure is unjustified. The purpose of the inspection activities is ongoing verification of the correctness of tax liabilities declared by taxpayers, aimed at preventing possible tax arrears as quickly as possible and bringing the taxpayer's settlements into compliance with the law” — we read in Zbigniew Stawicki's response to the interpellation.

In addition, the tax office is assisted in carrying out its activities by the development of tools that “can automatically detect risks/irregularities and verify them as part of inspection activities without referring cases to tax inspections.”

What are the effects of checking activities?

Data from the Ministry of Finance show that verification activities generate measurable revenues from tax subsidies. In 2024, it was as much as PLN 6.5 billion, while in 2023 it did not exceed PLN 4.8 billion.

— In practice, this means that when a taxpayer receives a request for verification activities, he or she is under strong pressure to correct his or her settlements, comments Adam Hellwig.

Data from the Ministry of Finance also show that the time of carrying out verification activities is extended. In 2024, they lasted on average over 40 days, while two years earlier it was just over 20 days, i.e. twice as short.

– That means that verification activities are becoming more and more burdensome for taxpayers as their average duration has almost doubled in three years. In extreme cases these activities may take up to several years — the maximum recorded time in 2024 was 1,093 days, notes Adam Hellwig.

The expert adds that the number of cases in which offices require taxpayers to submit documents is also growing – in 2024 there were over 1.5 million cases. – For taxpayers, this means the risk of long-term uncertainty and the need to engage resources in handling lengthy and potentially very thorough activities of the office – explains our interlocutor.

What's more, Ministry of Finance data show that verification activities are no longer just a preliminary stage of verification. The number of cases in which a tax audit is initiated after verification activities has significantly decreased (from 37.7 thousand in 2019 to 6.6 thousand in 2024). Simultaneously the number of tax proceedings initiated immediately after completion of verification activities is increasing.

— This indicates a change in strategy, in which evidence is collected at the stage of verification activities and decisions are made about further steps. For the taxpayer, this means that this theoretically milder verification mode can serve the tax authorities as a kind of foreground for the main battle that takes place during tax proceedings. – comments Adam Hellwig.

Author: Łukasz Zalewski, journalist of the Law section of Business Insider Polska