In recent years, electronic audits have gained prominence within the tax authority’s oversight powers in Mexico. This mechanism, regulated by the Federal Tax Code (CFF), allows authorities to verify taxpayers’ compliance with tax obligations more efficiently using technological tools.
Electronic audits are a type of tax review conducted by the authority through technology and the information stored in its databases. This includes reviewing filed tax returns, issued and received CFDIs (Digital Tax Invoices), as well as information provided by third parties related to the taxpayer, among other elements.
Electronic Audit Procedure
The electronic audit process is mainly regulated by Articles 42, Section IX, and 53-B of the CFF, and follows these stages:
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- Audit Notification: The tax authority notifies the taxpayer through the tax mailbox (Buzón Tributario) about the initiation of an electronic audit. This notification not only informs the taxpayer of the audit but also presents the findings that indicate omitted tax contributions or other irregularities through a provisional resolution, which may include a pre-settlement notice.
- Submission of Evidence and Clarifications: The taxpayer has 15 business days to submit any documentation and information they deem necessary to refute the inconsistencies identified.
- Evaluation of Information: The authority will analyze the submitted evidence and, if necessary, may issue a second request for information or extend the review.
- Final Resolution: Once the analysis is complete, the authority issues a resolution determining whether the taxpayer has corrected the irregularities or if a tax credit should be issued.
The Growing Use of Electronic Audits
Electronic audits are becoming more common in SAT’s (Mexico’s Tax Administration Service) oversight procedures due to their efficiency and low operational costs. In recent years, tax authorities have expanded the use of these audits as part of their technological modernization strategy.
While electronic audits are not as frequent as on-site inspections or desk audits, they are conducted when the authority has sufficient evidence to sanction non-compliance with tax obligations. However, in such cases, taxpayers have several legal tools at their disposal to challenge an unfavorable resolution resulting from an electronic audit. These include:
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- Initial Clarification: Before the authority issues a final resolution, it is crucial for the taxpayer to properly respond to requests and submit complete and compelling evidence.
- Appeal for Reconsideration (Recurso de Revocación): If the resolution is unfavorable, the taxpayer may file this appeal with SAT within 30 business days of the notification, highlighting any inconsistencies in the authority’s determination.
- Administrative Litigation (Juicio Contencioso Administrativo): If the appeal for reconsideration is not successful or if the taxpayer decides not to file it, they may bring a case before the Federal Administrative Justice Tribunal (TFJA). This process allows for a more thorough review of the taxpayer’s arguments and evidence.
- Indirect Amparo (Amparo Indirecto): If the electronic audit violates fundamental rights, the taxpayer may file an amparo lawsuit before the Federal Judiciary.
To minimize risks in electronic audits, taxpayers should adopt key preventive practices, such as:
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- Keeping tax and accounting records updated: Ensure that all transactions are properly recorded and that supporting documents are preserved.
- Regularly reviewing CFDIs: Verify that issued and received Digital Tax Invoices (CFDIs) comply with legal requirements and contain accurate information. Common errors include duplicate invoices or failure to record CFDIs.
- Monitoring the tax mailbox (Buzón Tributario): Enable notifications to ensure that no communication from SAT is overlooked. It is crucial to respond within the established deadlines to avoid penalties.
- Seeking specialized tax advice: Tax and Foreign Trade advisors can help identify potential risks, correct inconsistencies, and ensure an appropriate response in case of requirements. Additionally, it is recommended to conduct regular internal audits to detect and correct errors before they are identified by the tax authority.
Conclusion
Electronic audits represent a significant advancement in tax oversight due to their efficiency and reach, but they also pose major challenges for taxpayers. These include the pressure of tight response deadlines and the proper management of large volumes of digital information.
Understanding the procedure, deadlines, and available legal defense tools—such as the appeal for reconsideration and administrative litigation—is essential to protecting taxpayers’ rights. Moreover, being aware of the implications of these audits allows taxpayers not only to comply with tax obligations but also to avoid unnecessary sanctions and maintain a positive relationship with the tax authority.
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