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Tax, how the anti-tax evasion algorithm works

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Tax, how the anti-tax evasion algorithm works

For some time, the Agenzia dell’Entrate has declared war on tax evaders and is now ready to equip itself with an algorithm to hunt down the crafty tax collectors. In fact, the go-ahead has arrived, with a decree signed by the Minister of Economy Daniele Franco – after the OK of the Privacy Guarantor – to the Vera software (acronym for “Verification of financial reports”) which will provide itself with an algorithm to intercept the greater number of tax evaders, crossing the databases of current accounts, web and social platforms. Circular 21 / E issued on 20 June last presented this new contrast instrument: let’s see how it works.

How Vera works

In circular letter no. 21 / E dated 20 June 2022, the Agency explains Vera’s details, underlining that the data collected comply with the procedures for the pseudo-anonymization of data, required by the Privacy Guarantor, overcoming the critical issues initially raised regarding the processing of data . Basically, the algorithm cross-checks the data on current accounts, credit cards, movable and real estate assets, drawing on the data from the tax registry and tax returns of taxpayers. Once the scan is complete, taxpayers who have ended up under the lens of the tax authorities will receive a communication from the revenue in which they will be asked to provide explanations. The lists of taxpayers at risk will then be sent to the regional and provincial Departments to organize the ordinary control activity in relation to the positions with the highest risk of evasion, identified by examining the results of the application.

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Data anonymization

The main novelty of the tool, however, concerns anonymity and the OK of the Privacy Guarantor arrived precisely for this characteristic. At least in a first preliminary phase, the data collected in relation to possible anomalies will be associated with a code, without revealing the name of the taxpayer concerned and only in a second phase will the real name be made visible.
The decree then sets the retention times for anonymised data, setting a term from the second year following the one in which “the forfeiture of the taxing power matures”.

Access for taxpayers
There are currently three hypotheses for access to data by taxpayers: it could be guaranteed by the date of receipt of the compliance letter, ie the first “warning” from the tax authorities; from the date of delivery of the report of findings or of the notification of the preliminary deed or the tax deed in the case of taxpayers subject to actual control; or, finally, from the first day following the one in which the forfeiture of the power of assessment accrues for taxpayers who have not received either a warning from the tax authorities or a control deed.

Where controls are concentrated

In the document, the Agency specifies which activities the assessment will focus on in the course of 2022. The priority is for «positions regarding cases and behaviors that are of particular disvalue – it says -. In particular, evasive and abusive phenomena most damaging to the tax authorities, such as, as anticipated in the introduction, fraud, abuse of the right, false compensation, undue use of subsidized schemes and support measures will be the object of contrast. expected to face the negative consequences produced by the Covid-19 pandemic ».

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