Tax case fax: 322 million in 3 years, "invisible" online store hidden income

The "invisible" online store appeared

Author: Yun Ning Mao Arong

Through the intricate flow of funds, the inspectors finally found that all the funds in the relevant accounts of the enterprise are closely related to the account of a "special account for transaction funds to be liquidated". Who opened this account and what kind of funds are involved?

Recently, the First Inspection Bureau of the Jiaxing Municipal Taxation Bureau of the State Administration of Taxation (hereinafter referred to as the First Inspection Bureau) tracked the clues and investigated and dealt with a case of tax evasion by an e-commerce enterprise with hidden income. The company involved in the case, H Trading Company, used a personal account to collect sales revenue from its online store, and concealed a total of 322 million yuan in sales revenue from 2020 to 2022 without filing and paying taxes in accordance with the law. In response to the illegal acts of H Trading Company, the First Inspection Bureau made a decision to recover taxes and fees of 5.82 million yuan, impose a late fee and impose a fine of 3.42 million yuan on it in accordance with the law.

"Online sales are hot" > "long-term losses", which is true and which is false

In October 2022, the First Inspection Bureau received a report letter of tax-related violations, which stated that in the process of opening an online store on the L e-commerce platform from 2020 to 2022 to sell goods, H Trading Company concealed a large amount of sales revenue through private account collection and failed to declare it in accordance with the law, and there was an illegal act of tax evasion. In the letter, the whistleblower also cited the names of the ERP (Enterprise Resource Management System) software used by H Trading Company, the names of two online stores registered on the online platform, and other relevant information.

After receiving the report letter, the First Inspection Bureau believed that the clues of the report were clear and credible, so it organized inspectors to conduct a preliminary verification and analysis of the tax-related data and situation of H Trading Company.

The inspectors inquired about the collection and management system and found that H Trading Company was a small-scale taxpayer. From 2020 to 2022, the average annual operating income declared by enterprises is more than 60 yuan, and during this period, they all enjoy the VAT exemption policy for small-scale taxpayers, and the actual amount of VAT paid is zero. The company's income tax filing information shows that the company has been in a loss-making state for a long time.

The operational status shown in the company's reported information is very different from the situation described in the reported information.

In order to understand the sales of the company's online store, the inspectors logged on to the L e-commerce platform and quickly found the two online stores opened by the company mentioned in the report materials, and found that the link sales statistics of some of the products on sale in the online store were 10W+. According to the unit price of these products, which range from 10 yuan to 30 yuan, the monthly sales amount of these popular products in the two online stores alone is close to 3 million yuan.

After conducting a thorough investigation of the sales scale of H Trading Company's online store, combined with the company's declaration data, the inspectors believed that the sales revenue scale of H Trading Company's online store was very different from the tax declaration information of the enterprise, and there was a major suspicion of concealing sales revenue and evading tax payment. As a result, the First Inspection Bureau set up an inspection team to file a case against H Trading Company for inspection.

According to the previous experience of handling cases, verify the real sales status of commercial and trade enterprises, and by verifying the inventory status of enterprises, you can clarify the size of their sales volume. In accordance with this line of thinking, the inspection team decided to start by verifying the business model and inventory of the enterprise and looking for clues and evidence.

The inspectors placed orders for the goods at the company's two online stores, and found that the goods were shipped from Guangxi, while the manufacturers were a manufacturer in Guangxi and a company in Shanxi. The results of the sampling inspection show that the place of registration, the place of product delivery and the place of production of the enterprise involved in the case are inconsistent. The inspectors judged that the business model of H Trading Company should be only responsible for the promotion and sales of goods, and the relevant products were produced and sent by the cooperative factory and the partner. In this "zero inventory" model, it is not only time-consuming and laborious to obtain inventory and other data, but also cannot directly reflect the real income of the enterprise.

Paint traces suspicious accounts

The inspectors discussed and analyzed the company's business conditions and the direction of the next inspection, and they believed that H Trading Company had two online stores engaged in online sales activities. Online transactions have the characteristics of virtuality and liquidity, and the electronic data related to their operations is easily hidden or even deleted. If you rush to approach the company without full certainty, the investigation will face a disadvantage if the relevant data and evidence are destroyed.

Therefore, the inspectors decided to continue to carry out external investigations - starting from the flow of funds of the enterprise, obtaining the bank account flow of the enterprise involved in the case and the relevant personnel, and investigating and verifying the true situation of the sales revenue of H Trading Company.

Relying on the multi-departmental cooperation mechanism, the inspection team was informed through the financial sector that H Trading Company and seven relevant personnel of the enterprise had opened bank accounts in 23 banks. The inspectors spent two weeks collecting data on the flow of funds from more than 100 bank accounts of the enterprises involved in the case and the relevant personnel. These data involve hundreds of thousands of transactions of funds, and the workload of analysis and verification is huge.

The inspectors rose to the challenge, using analysis software and other tools to draw a map of the flow of funds of the enterprise, sort out the financial relationship between the accounts of the enterprises involved in the case and related personnel layer by layer, and trace the source of funds according to the map.

Hard work pays off. Through the intricate flow of funds, they finally found that all the funds in the enterprise-related accounts were closely related to an account called "Bank M's e-commerce transaction funds to be cleared".

According to statistics, during the inspection period, this "special clearing account" remitted a total of 322 million yuan to five bank cards of the legal representative of the enterprise, Mr. Li, and Mr. Zhang, the former legal representative of the enterprise, in 1,580 times. After receiving the above-mentioned payments, Li and Zhang transferred part of the money in batches from time to time in the name of "payment for goods" and "material costs" to bank accounts opened in Guangxi, Shanxi and other places.

The "special account for the funds to be cleared of Bank M's e-commerce transactions" found during the inspection attracted the attention of the inspectors. Who opened this account and what kind of funds are involved?

An online store that unexpectedly appeared

The inspection team was immediately dispatched to interview the management of Bank M.

The inspectors learned from the bank personnel that this "special clearing account" is a special settlement account opened by the L e-commerce platform in Bank M. After the consumer places an order and pays on the L e-commerce platform, the relevant payment will be deposited in this special account first, and after the consumer confirms the receipt, Bank M will transfer the payment from the special account to the online store merchant on the platform according to the agreement, and the merchant will then obtain the sales payment through the bank card bound to the store background.

According to the information provided by Bank M, the inspection team confirmed that a large amount of funds transferred to the bank cards of the enterprises and personnel involved in the case in the "special account for e-commerce transaction funds to be liquidated of Bank M" were likely to be sales funds transferred from the L e-commerce platform to them. However, whether these payments are indeed the sales revenue of the enterprise involved in the case from the opening of an online store on the L e-commerce platform still needs to be further confirmed by collecting evidence.

The inspectors learned from the staff of Bank M that if they want to verify whether the funds remitted from the "special clearing account" are the sales funds of the online store, they must provide a key information - "store ID", and the bank can retrieve the capital flow data of the corresponding store through the "store ID".

Based on this clue, the inspection team sent a request to the Shanghai tax authorities for assistance. Subsequently, with the assistance of the Third Inspection Bureau of the Shanghai Municipal Taxation Bureau, the inspectors conducted an external transfer to the L e-commerce platform to collect evidence, and required the platform management enterprise to provide the "store ID" data of all online stores registered on the platform by H Trading Company.

Soon, the L e-commerce platform provided the "store ID" data of H Trading Company's registered online store in the L e-commerce platform. After receiving the information, the inspectors unexpectedly found that the company had opened not two online stores on the L e-commerce platform - but four.

Using the "store ID" information provided by the enterprise, the inspectors retrieved and matched the sales revenue flow data of the four online stores of the enterprise involved in the case, and finally confirmed that the 322 million yuan transferred to the private accounts of Li and Zhang in the inspection year was derived from the sales revenue of the four online stores of H Trading Company.

At this point in the investigation, the inspectors believe that if the electronic sales order of the company's online store is obtained, and then matched with the capital flow data obtained by the investigation, the investigation of the case will be impeccable. However, during the verification process, E-commerce Platform L refused to provide the inspectors with the electronic sales orders of the enterprises involved in the case on the grounds that they involved the trade secrets of other enterprises.

Raid to find evidence, and the truth comes out

How should the next step in the investigation be conducted?

The inspectors remembered that the report had mentioned in the report that the enterprise involved in the case used ERP software for business management. After studying and analyzing the facts of the case, they believed that for the sake of management convenience and other considerations, the enterprises involved in the case must have the data of electronic sales orders in their online stores. As a result, the inspection team decided to carry out a surprise inspection of the enterprises involved in the case.

In order to ensure that the surprise inspection achieves the expected results, the inspection team made a detailed plan, and together with relevant technical personnel, how to verify and extract ERP software sales report data and enterprise network sales order information for targeted drills.

Subsequently, the inspection team conducted a surprise inspection of the office premises of H Trading Company as planned. The inspectors are divided into two groups: one group is responsible for obtaining the company's ERP software data and financial accounting data such as account books and vouchers, and the other group is responsible for obtaining the electronic sales order data of the company's online store.

Due to the full preparation, the inspectors successfully obtained the ERP sales statistics report data of the enterprise. However, when another group of inspectors asked the company's operators to log in to the online store backend and export electronic sales order data, the company personnel refused to log in on the grounds that they did not have the authorization of the person in charge of the enterprise and the financial director.

Since Li, the legal representative of the enterprise, was not at the inspection site, the inspectors questioned Zhang, the former legal representative of the enterprise and the current director of operations, publicized the tax law to him, and presented all kinds of evidence obtained in the early verification. In the end, Zhang agreed to cooperate with the investigation of the tax authorities, authorized the technical personnel to log in to the background of the online store, exported more than 1,300 detailed data of electronic sales orders, and admitted that the enterprise collected the sales money of the online store through his personal account and failed to declare and pay taxes in accordance with the law.

After the surprise inspection, the inspection team carefully combed and checked the order details and ERP sales statistics reports exported from the background of the company's online store in combination with the capital flow data, and finally confirmed that H Trading Company obtained a total sales revenue of 322 million yuan by operating 4 online stores from 2020 to 2022, and failed to declare and pay taxes in accordance with the law.

In response to the illegal acts of H Trading Company, the tax authorities characterized its behavior as tax evasion in accordance with the law. Because H Trading Company is a small-scale VAT taxpayer and the account certificate information is incomplete, and the operating cost cannot be determined, the First Inspection Bureau adopted the verification and collection of it in accordance with the law, and made a decision to recover the tax payment, impose a late fee and impose a fine of a total of 9.24 million yuan. At present, all the taxes of the enterprises involved in the case have been paid into the treasury.

After making a decision, we should act prudently and seek evidence

Author: Zheng Ting, Director of Jiaxing Taxation Bureau of the State Administration of Taxation

■Tax case analysis

This case is a typical tax-related illegal case in which an e-commerce enterprise collects sales payments from online stores through personal bank cards, conceals the sales revenue of goods, and evades tax payment.

Online transactions are liquid, virtual and relatively hidden, which increases the difficulty of tax supervision and verification of tax-related violations. The investigation and handling experience of this case provides enlightenment for the tax authorities to strengthen the tax supervision of the e-commerce industry, investigate and handle similar tax-related illegal cases, and prevent the loss of tax revenue.

Clear the periphery and focus on breakthroughs. In this case, the inspectors did not act rashly after they decided to file a case for investigation after combining the clues reported by the inspectors and the preliminary investigation. Combined with the characteristics of e-commerce, prudent inspectors believe that if they contact enterprises without full grasp, it is easy to startle them, and if the data related to the operation of enterprises is hidden or even destroyed, the verification work will face an unfavorable situation. Therefore, the inspectors adopted the investigation strategy of "periphery first, then central", and obtained evidence such as the operation of the online store and the flow of funds from the external investigation, and then conducted on-site inspections and personnel inquiries on the enterprise. This measure has proved to be very effective, not only collecting a large amount of detailed evidence, but also making the interview work of the people involved in the case a breakthrough and quickly effective.

Dig deep and dig carefully, and rigorously seek evidence. During the investigation of this case, the inspectors focused on the capital flow of the enterprise, traced it all the way, traced it back to the source, found the special fund settlement account opened by the e-commerce platform, and verified the amount of funds transferred from the special clearing account to the personnel of the enterprise involved in the case through external transfer verification. At this time, the evidence of the flow of funds in the hands of the inspectors can confirm that the enterprise involved in the case has obtained a large amount of sales revenue from the online store without declaring. However, the rigorous and meticulous inspectors did not stop there, they believe that if the electronic sales orders of the company's online store match the company's capital flow data in the same period, not only can the specific sales revenue of the enterprise be found out, but also all aspects of the verification work will be more rigorous and impeccable.

In the end, after careful deployment, the inspection team successfully extracted the detailed electronic sales order data of the enterprise through efficient surprise verification work, matched the evidence of funds, confirmed the illegal fact that the sales revenue of the company's online store was not declared, and finally concluded the case with irrefutable evidence.

Source: China Tax News, 2024-04-23, edition: 06. The content of this article is for general information purposes only and is not intended as formal auditor, accounting, tax or other advice, and we cannot guarantee that such information will remain accurate in the future. No person should act on the basis of the information contained herein without having due regard to the relevant circumstances and obtaining appropriate professional advice. The articles reproduced in this issue are for academic exchange purposes only. The original copyright of the article or material belongs to the original author or original copyright owner, and we respect copyright protection. If you have any questions, please contact us, thank you!