Over the past ten years, the tax administration has continued to improve its tools for detecting tax fraud by natural persons. Know “deliberate violation of tax regulations”. At the same time, however, it still faces the greatest difficulties in assessing their relevance and their real impact in the fight against this phenomenon, due to the lack of serious and indisputable quantification of tax fraud in France. It is an observation of voluntary administration, but sometimes in “fog” which the Court of Auditors elaborates on in its report “detecting personal tax fraud”, revealed this Wednesday, November 15. It should be emphasized that the work began after a citizen consultation launched in 2022 by the institution on rue Cambon.
In this detailed report of nearly 100 pages, financial judges focused their attention “detection of reporting anomalies and tax irregularities” related to taxes “directly paid by natural persons (income tax, real estate tax, movable property income tax, inheritance tax, gift tax, property tax, housing tax, transfer tax, editor’s note)”. Taxes are far from negligible for public finances… According to the Court “these represented more than €160 billion in 2022, or 30% of the net tax revenue collected on behalf of all public administrations”. On the other hand, Value Added Tax (VAT) and General Social Security (CSG), two taxes that also weigh heavily on individuals’ shoulders, were excluded from the report because “in practice, they are liquidated and recovered without the intervention of {individuals}”.
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Deeply focused on cross-referencing data
With the dematerialization of taxpayer income statements in 2016, mass data cross-checking has become Bercy’s main tool for tracking tax fraud. Financial authorities can count on a small team to achieve their goal “consists of five dedicated agents assisted in their work by two data scientists”team to which He visited the capital last May.
These numbers, although limited, can cover today “50 Tax Risks for Individuals”For example “income tax fraud, tax credits and credits, inheritance tax, transfer tax for consideration or even transfers of shares at a token or reduced price”. 2022 was the intersection of bulk data “at the beginning of 30% of tax audits carried out on natural persons”underlines the report. By 2027, the goal of public authorities is to reach the 50% limit. However, let’s not forget that cross-checking of data remains only a tool and that public finance entities remain fully responsible for the initiation of tax control.
As a result of this increase in data crossing power, there was a “quiet revolution” within the Directorate General for Public Finance (DGFiP), which, according to the Court of Auditors, led to the transition “from the logic of the three-year audit of the largest taxpayers (the so-called “high-stakes” files) to the logic of risk analysis” powered by bulk data processing.
And tax information
In parallel with technological advances, Bercy has focused its efforts on tax reporting “identify fraudulent programs as soon as possible”. We are talking here mainly about reports from police services, reports from individuals and information obtained through the exchange of information with foreign public administration bodies. Public authorities have also developed a system of tax advisors, “persons reporting possible fraud against DGFiP remuneration”, reminds the Court. As of 2018, the state has recovered 110 million euros against a payment of 1.8 million euros to six tax advisers.
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Mixed results
Despite the efforts of the tax administration, the Court of Auditors points out in its report “Tax audit data shows that the proportion of fraud cases or those subject to adjustments in audited files has remained at around 55% since 2018, preventing us from making a qualitative leap in the audit strategy”. Despite more sophisticated technology and the strengthening of tax reporting, the amounts claimed by the tax authorities remain stable after 10 years of audit: 14.6 billion euros in 2022 between companies and individuals, compared to 14.4 billion in 2012. The control strategy that Elisabeth Borne’s government hopes will that he will get better after it presenting its anti-fraud plan last spring, which ensures the strengthening of the resources of tax control services.
Absence of tax fraud estimate
Evaluating the impact of the new tools used by Bercy is all the more difficult because, according to the Court of Auditors, the tax administration does not have any reliable and indisputable data on the total amount of tax fraud. “None of the figures presented in the public discussion are based on undisputed work, without being able to say whether the amount of actual fraud, i.e. voluntary irregularities, is close to the amounts requested after the audit (14.6 billion euros in 2022) or if it significantly exceeds it”lament the judges who thus intercede “the tax administration is catching up compared to many of its foreign counterparts in estimating the amount or tax gap* for each of the main taxes”. Estimates by Bercy that should not be completed before 2027. If the Fraud Review Board, installed by the government this fall and which brings together an audience of experts will achieve this next summer. An ambitious goal set by the executive.
*The tax loophole corresponds “the difference between the amount of taxes actually collected and the amount that would result from the perfect application of the law without distortion”.
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