Guarantee system is a common means of credit enhancement in civil and commercial legal relations, which is of great significance to the financing and development of enterprises. In the field of tax administration, the tax guarantee system also has an important role that cannot be ignored, and it has positive significance in safeguarding the national tax collection and promoting the effective exercise of taxpayers' right to relief. This article is intended to analyze the common disputes in practice from the applicable circumstances of tax guarantee for reference.

I. Under what circumstances can an enterprise apply for a tax guarantee?

(I) Applicable Circumstances of Tax Guarantee

The Trial Measures for Tax Guarantee clearly stipulates three types of circumstances in which tax guarantee can be applied, including the tax authorities have the basis to believe that the taxpayer has the behavior of evading the tax obligation, and the taxpayer is ordered to pay the tax payable by the deadline before the stipulated tax period, and it is found that the taxpayer has the obvious signs of transferring or hiding its property or taxable income within the deadline, and the taxpayer is ordered to provide the tax guarantee; the taxpayer owes the tax or late payment of tax The taxpayer or its legal representative needs to leave the country; the taxpayer and the tax authorities in tax disputes without paying the tax, the need to apply for administrative reconsideration.

In practice, the aforementioned third situation that "guarantee before reconsideration" is the most widely used in practice, which originates from the provisions of Article 88 of the Tax Collection and Administration Law, "taxpayers, withholding agents, tax guarantors and tax authorities in tax disputes, you must first pay or release the tax in accordance with the tax authority's When a dispute arises between a taxpayer, withholding agent or tax guarantor and a tax authority over taxation, the taxpayer must first pay or pay off the tax and late payment or provide corresponding guarantee in accordance with the tax authority's decision on taxation, and then apply for administrative reconsideration in accordance with the law; and if the decision on administrative reconsideration is not accepted, the taxpayer may sue in the People's Court in accordance with the law". In other words, for "tax disputes", taxpayers need to settle the tax and late payment fees or provide guarantees before they can enter the relief program - administrative reconsideration. Tax disputes mainly include confirmation of the subject of taxation, the object of taxation, the scope of taxation, tax reductions, tax refunds, the applicable tax rate, the basis for tax calculation, tax links, tax period, tax location and tax collection methods.

However, in practice, the time for payment of tax or provision of guarantee before reconsideration is often very limited. Article 73 of the Implementing Rules of the Tax Collection and Management Law provides that "if a taxpayer or withholding agent engaged in production or business fails to pay or release the tax in accordance with the prescribed period, or if a tax guarantor fails to pay the tax guaranteed in accordance with the prescribed period, the tax authorities shall issue a notice of tax payment by the deadline, and the maximum period for which the tax is ordered to be paid or released shall not be more than 15 days." Based on this, the time limit for tax payment or tax guarantee in the Decision on Tax Treatment is usually set at 15 days, which is commonly expressed as "You are restricted to pay the above taxes and late payment fees into the treasury at XXX Tax Bureau within 15 days from the date of receipt of this Decision. If the payment is not made after the deadline, it will be enforced in accordance with the provisions of Article 40 of the Tax Collection and Management Law. Your unit has a dispute with us on tax payment, you must first pay the tax and late payment or provide the corresponding guarantee in accordance with the deadline of this decision, and then you can apply for administrative reconsideration to XXX Taxation Bureau within 60 days from the date of the payment of the above amount or the provision of the corresponding guarantee is confirmed by the tax authorities". It can be seen that, in the tax-related disputes which need to be preceded by reconsideration, the deadline for taxpayers to initiate administrative reconsideration is limited to 15 days, and if the taxpayers do not settle the tax or provide the tax guarantee within 15 days from the receipt of the processing decision, the taxpayers will lose the right to relief. However, in practice, many cases involve large amount of tax, long time span, and the corresponding amount of late payment fees, and it is usually difficult for taxpayers to raise cash for tax settlement within 15 days, and tax guarantee, as a flexible means of tax collection and management, can provide a channel for the collection of national tax while guaranteeing the taxpayers to exercise their right to relief smoothly.

II. Specific ways of tax guarantees

Tax guarantees are required to cover taxes, late fees and the costs of realizing taxes and late fees. Article 2 of the Trial Measures on Tax Guarantees specifies three types of tax guarantees, including guarantees, mortgages and pledges, and sets out the specific circumstances of the guarantees, both positively and negatively:

Although the Trial Measures for Tax Guarantees stipulates the specific ways of guarantee through positive provisions and negative exclusions, the more diverse forms of transactions in practice have given rise to a variety of guarantees, the application of which in the field of taxation is subject to certain disputes, and several common disputes will be selected and analyzed through cases in the following paragraphs.

III. Analysis of common disputes over tax guarantees

(I) Tax guarantee confirmation is justiciable and does not require reconsideration beforehand

Basic case: on May 20, 2019, A tax authority served Chen with the Decision on Tax Treatment, requiring Chen to pay the individual income tax and stamp duty payable on the transfer of his shareholding in 2017, and informing him that if he had any objections, he had to settle the tax and late payment or provide corresponding guarantee within 15 days, and then he could apply for administrative reconsideration. Chen did not accept the tax authority's processing, to provide security and then apply for reconsideration. on May 30, Chen submitted to the tax authority tax guarantee application information, but the tax authority refused to receive and review, Chen could only through the tax office door and office space posted in the tax guarantee application. Subsequently, Chen filed a lawsuit against the tax authority's inaction, and the court held that, by the time Chen filed the lawsuit, the tax authority had not yet examined and dealt with Chen's application for tax guarantee, which belonged to the delay in the fulfillment of the statutory duties, and ordered it to examine and make administrative action on Chen's application for tax guarantee within 30 days from the date of the entry into force of the judgment.

Case Analysis: the tax authority should fulfill its statutory duty to examine whether the guarantee provided by the taxpayer meets the requirements. Whether the tax guarantee can be handled on the administrative relative's exercise of the right to reconsideration and relief plays a key role, and then on the tax processing decision can accept the review of the review and litigation play an important role, will likely have an impact on the administrative relative's substantive rights and interests. As mentioned above, the "tax disputes" which need to be preceded by tax payment and reconsideration mainly include disputes on tax collection, and disputes on the confirmation of tax guarantees do not belong to tax disputes and do not need to be preceded by reconsideration, and taxpayers can directly file administrative lawsuits to safeguard their own remedies for disputes such as acceptance and confirmation of tax guarantees.

(II) Whether the equity can handle the tax guarantee?

Basic Case: The Inspection Bureau of Municipal Taxation Bureau of City B inspected the tax declaration and payment of Company B from January 1, 2019 to December 31, 2021, and then issued the Decision on Tax Treatment, requiring Company B to pay nearly 2 million yuan of retroactive taxes and fees and informing Company B that if Company B has any objections, it must first pay or settle the taxes and late fees or provide corresponding tax guarantees, and then it can apply for administrative reconsideration according to the law within Company B was told that if it had any objection, it must first pay or pay the tax and late payment fee or provide corresponding tax guarantee, and then it could apply for administrative reconsideration within sixty days. Company B then applied for tax guarantee in the form of "equity guarantee" and then filed for administrative reconsideration. The reconsideration authority considered that the equity guarantee materials submitted by Company B did not comply with the regulations and did not recognize the tax guarantee provided by Company B. Company B then filed a lawsuit. The Court of First and Second Instance held that the Tax Guarantee submitted by Company B stated that the tax guarantors were the 44 shareholders of the company, and that the guarantee was in the form of "Equity Guarantee", which was not a certificate of right, and could not be delivered as a certificate of right, and was not enforceable. Therefore, company B request to order the B city tax bureau inspection bureau to re-examine the administrative behavior of the administrative act of its equity to provide security for the tax involved, in accordance with the law, do not support.

Case Analysis: Article 25 of the Trial Measures for Tax Guarantee stipulates that bills of exchange, checks, promissory notes, bonds, certificates of deposit and other documents of rights can be pledged, and that for movable assets or documents of rights with great fluctuations in actual value, the tax authorities above the municipalities and autonomous prefectures can confirm that the tax authorities do not accept them as a tax pledge. The aforementioned listed rights certificates can be transferred to the possession of the tax authorities, but the stocks and shares that need to be registered as pledge according to the law are not included. It can be seen from the case law that the property used for pledge must have both enforceability and certainty of value, and can be delivered to the tax authorities for possession with less fluctuation of value.

(III) Can accounts receivable be secured for tax purposes?

Basic Case: On September 29, 2018, C Municipal Inspection Bureau made a Decision on Tax Treatment, requiring Company C to pay 95.18 million yuan of retroactive taxes and corresponding late fees within 15 days from the date of receipt of the Decision. Company C disagreed with this treatment and filed an application for tax guarantee to the Inspection Bureau on October 16 of the same year, taking 100 million yuan of financial products purchased by its wholly-owned subsidiary, Company D, in a bank and 308 million yuan of claims receivable by Company C as tax guarantee. After examination, the Inspection Bureau issued a Notice on Tax Matters to Company C on November 27, considering that the property used for tax guarantee did not have the qualification of pledge and rejecting Company C's application for tax guarantee. Company C refused to accept the application for tax guarantee. Company C applied for reconsideration to the Municipal Taxation Bureau, which was upheld by the Municipal Taxation Bureau, and Company C appealed to the court in this regard. The court held that movable property or rights as a tax pledge must have the following conditions at the same time: consent of the tax authority, delivery to the tax authority in possession, and the tax authority has the right to dispose of it. In this case, the available evidence confirmed that the 100 million yuan financial product had been frozen by the Public Security Bureau on September 6, 2018, and property seized or frozen in accordance with the law shall not be used as security property. Therefore, the financial products do not meet the conditions for tax pledge and cannot be used as tax pledge secured property. The receivable claims provided by Company B are not bills of exchange, checks, promissory notes, bonds, certificates of deposit and other documents of rights other than cash, and there is uncertainty in the realization of the claims, which cannot be directly transferred to the possession of the tax authorities to offset the tax and late payment when the conditions are ripe.

Case Analysis: Tax pledge is different from tax mortgage, in which the taxpayer can carry out assessment through a third party organization to prove its value and enforceability, while in the case of pledge, due to the uncertainty of the value and enforceability, the tax authority has a greater discretionary power. The receivable claims in this case are similar to the aforementioned equity, and both the tax authorities and the court considered that the rights used for tax security should have certainty of value and enforceability, and be able to be delivered to the tax authorities and realize its value.

(IV) Can the collateral that has been established as a mortgage be used as a tax guarantee?

Basic case: an enterprise in the receipt of the "tax treatment decision" of the competent tax authorities of the treatment of dissatisfaction, the tax matters to be administrative reconsideration, because it does not have sufficient funds to pay the tax and late fees, so the enterprise to its name of the property to provide tax security. The value of the property was 10 million yuan, a bank as the first mortgagee to set up a mortgage of 5 million yuan, the remaining value is sufficient to cover the tax and late fees, but the tax authorities have set up part of the security on the grounds of its mortgage not to confirm its tax guarantee.

Case Analysis: As the second mortgagee, the tax authority needs to verify the value of the mortgaged property and the amount of the first mortgagee's claim before establishing the mortgage, and also needs to coordinate with the first mortgagee in the liquidation stage to ensure the realization of the mortgage and the collection of the full amount of state tax. Considering these factors, in practice, some tax authorities take a cautious attitude and do not recognize the collateral for which a mortgage has been established. In the author's opinion, the Trial Measures for Tax Guarantees do not explicitly exclude the second mortgage of assets, and from the perspective of safeguarding the taxpayers' right to relief and the collection of national taxes, the tax authorities should adopt an inclusive and prudent attitude, fully investigate the second mortgages, and accept the second mortgages, if they meet the requirements, as tax guarantees.