Failure to submit PIT-16 on time - tax consequences

Service-Tax

The PIT-16 form is related to a simplified form of taxation with income tax, which is a tax card. Taxpayers often decide to use a tax card as part of their business activity due to numerous simplifications and facilitations in tax settlement. Due to the fact that the choice of taxation in this form is an exception to the general rules, the taxpayer is obliged to inform the tax authority about the intention to use the tax card. What are the consequences of failing to submit the PIT-16 deadline? The answer is in the article!

The method of choosing taxation in the form of a tax card

All regulations regarding the tax card were included in the Act of November 20, 1998 on the flat-rate income tax on certain income earned by natural persons. This act lists the material conditions that must be met in order to tax the business in the form of a tax card. Art. 25 sec. 1 point 1 of the Act indicates that taxpayers conducting business activity are subject to taxation in the form of a tax card, if they submit an application for taxation in this form.

The deadline and method of submitting an application for taxation in the form of a tax card is described in art. 29 of the Act. Pursuant to this provision, an application for taxation in the form of a tax card for a given tax year is submitted by the taxpayer to the competent head of the tax office, no later than by 20 January of the tax year. The correct form is PIT-16.

On the basis of this form, the head of the tax office, taking into account the application for the use of a tax card, issues a decision determining the amount of income tax in the form of a tax card, separately for each tax year. Based on this decision, the taxpayer pays a fixed monthly tax in the form of a tax card.

If a taxpayer starts a business activity, an application for taxation in the form of a tax card is submitted to the competent head of the tax office before commencing business. Locally competent for income tax paid in the form of a tax card is the head of the tax office according to the location of the organized establishment, indicated in the application to the business register.

Importantly, the application for taxation in the form of a tax card, the taxpayer may attach to the application for entry in the Central Register and Information on Economic Activity submitted on the basis of the provisions on freedom of economic activity.

It follows from the above provision that the taxpayer must obligatorily submit a PIT-16 application. This can be done in two ways: either directly send the application via the Internet to the tax office (e.g. using an e-declaration or tax portal), or attach the application to the submitted CEIDG-1 form at the time of registering a business.

In the CEIDG-1 form, the entrepreneur specifies what form of taxation he will apply. Please note that simply checking the "Tax card" box is not sufficient. The provision clearly indicates that PIT-16 must be attached to the CEIDG-1 form.

Failure to submit PIT-16 within the deadline, at the time of registering the activity in the commune (city) office, results in the need to submit it yourself to the competent tax office. The cited art. 29 of the Act states that the application is submitted before the commencement of operations.At this point, it should be emphasized that the phrase "commencement of business" is understood as the actual performance of the first activity as part of economic activity, and not the date of registration of the activity in the commune (city) office.

Example 1.

The taxpayer registered a business on March 15. He chose a tax card as a form of taxation, but he did not attach the PIT-16 application to the CEIDG-1 form. On March 20, he submitted an application to the head of the tax office. The first activity in the field of business activity was performed by the taxpayer on 23 March. The taxpayer acted in accordance with the law.

Failure to submit PIT-16 within the deadline

However, the question arises, what are the effects of failure to submit PIT-16 on time?

Unfortunately, the analysis of the regulations shows that the tax consequences of such an action are very serious for the entrepreneur.

Failure to submit PIT-16 within the deadline means that the taxpayer has no right to apply the rules provided for the tax card. Moreover, the time limit set cannot be restored. It will also be useless to make an active regret.

The above restrictive rule results from the fact that the deadline for submitting the PIT-16 application is a material deadline that cannot be restored. This position was confirmed by the Supreme Administrative Court in the judgment of October 14, 1998, III SA 821/97.

A similar thesis can be read in the commentary to the act on flat-rate income tax on certain income earned by natural persons (Bartosiewicz, Adam and Kubacki, Ryszard. ABC, 2011). The book indicated: "Both of the above-mentioned terms are substantive law terms (as they are not related to any proceedings). Due to their nature, these dates cannot be reinstated. (…) The time limit for choosing the form of lump sum taxation is at the same time (like most terms of substantive law) of a strict character. The above means that after its expiry, the right to apply for taxation in the form of a tax card expires definitively - in relation to a given tax year (exclusion) "

Failure to meet these deadlines will permanently deprive the taxpayer of the right to apply for taxation in the form of a tax card in a given tax year. The application cannot be successfully submitted after the deadline, which is not recoverable.

The consequence of the above is the inability to use the tax card. As a result of the above, the taxpayer's activity is governed by the general principles of taxation provided for in the Personal Income Tax Act. As you can see, you have to keep an eye on the deadline, because there are serious consequences for failing to submit PIT-16 on time!

Example 2.

The taxpayer registered a business on February 20, 2019. He chose a tax card as a form of taxation, but he did not attach the PIT-16 application to the CEIDG-1 form. The taxpayer also failed to send the application to the head of the tax office. It was only in January 2020 that the entrepreneur realized his mistake and submitted the outstanding PIT-16 for 2019. Such action is incorrect. The taxpayer on the basis of economic activity conducted in 2019 cannot use the tax card and must settle accounts on general principles.