Refund of Excessively Paid Tax Amounts from the Budget of a Municipal Entity

The Ministry of Finance of Russia, in its letter dated December 23, 2015, No. 02-08-10/76221 regarding the refund of overpaid tax amounts from the budget of a municipal formation, noted the following.

In accordance with Article 166.1 of the Budget Code of the Russian Federation (hereinafter - BCK RF) the Federal Treasury, within the framework of implementing established budgetary powers, transfers, among other things, funds necessary for the refund (offset, correction) of overpaid or overcollected tax amounts, fees and other payments from the unified accounts of the relevant budgets to the corresponding accounts of the Federal Treasury intended for accounting of receipts and their distribution between the budgets of the Russian Federation budget system, in accordance with the procedures established by the Ministry of Finance of the Russian Federation.

The aforementioned procedure was approved by Order No. 125n of the Ministry of Finance of Russia dated December 18, 2013 "On Approval of the Procedure for Accounting by the Federal Treasury of Receipts in the Budget System of the Russian Federation and their Distribution between the Budgets of the Russian Federation Budget System," according to paragraph 27 of which refunds to payers of overpaid (overcollected) amounts subject to reimbursement, as well as interest amounts for untimely refund and interest amounts accrued on overcollected sums, are carried out based on refund applications submitted by revenue administrators to the budgets, within a period not exceeding three working days following the day of their submission to the Federal Treasury authority, in accordance with the amounts of receipts subject to transfer to the budgets.

According to the provisions of Article 40 of the BCK RF all tax and non-tax revenues, gratuitous receipts, including targeted inter-budget transfers from other budgets of the Russian Federation budget system serving as sources for forming the revenue of the relevant budget, are credited to the unified account of the corresponding budget of the Russian Federation budget system.

Based on the above, the Federal Treasury's refund of overpaid tax amounts from the funds of targeted inter-budget transfers received on the unified account of the city settlement budget does not contradict the budget legislation of the Russian Federation.

Since 2014, the provision of subsidies, subventions and other inter-budget transfers with a specific purpose (hereinafter - targeted funds) from the federal budget to the budgets of the subjects of the Russian Federation is carried out based on the actual needs of the recipients of the budgets of the subjects of the Russian Federation.

The aforementioned mechanism for providing targeted funds from the federal budget to the budgets of the subjects of the Russian Federation implies that territorial offices of the Federal Treasury exercise powers to transfer inter-budget transfers, which are provided within the amount necessary for payment of monetary obligations related to expenditures by recipients of the subject of the Russian Federation budget funds, with sources of financial support being targeted funds, in accordance with procedures established by the Government of the Russian Federation. As a rule, this procedure is set annually by the Government of the Russian Federation decree on measures for implementation of the federal law on the federal budget.

In implementing this mechanism, no balances of targeted funds provided from the federal budget are formed on the unified account of the subject of the Russian Federation (local budget), accordingly, this mechanism excludes the possibility of writing off such funds from the unified accounts of these budgets, including for the purpose of refunding overpaid tax amounts.

In this regard, we consider it appropriate to introduce at the level of subjects of the Russian Federation and municipal formations a mechanism for providing targeted inter-budget transfers based on actual needs in order to avoid the situation described in the letter, namely the refund of overpaid tax amounts from targeted inter-budget transfers.

Additionally, paragraph 7 of Article 10 of Federal Law No. 384-FZ dated December 1, 2014 "On the federal budget for 2015 and for the planning period 2016 and 2017" stipulates that territorial offices of the Federal Treasury are entitled in 2015 to exercise powers of recipients of funds of the subject of the Russian Federation budget, in accordance with the law on the budget of the subject of the Russian Federation, based on decisions of chief fund managers of the subject of the Russian Federation budget, to transfer inter-budget transfers provided from the budget of the subject of the Russian Federation to the local budget in the form of subsidies, subventions and other targeted inter-budget transfers within the amount necessary for payment of monetary obligations related to expenditures by recipients of funds of the local budget, with sources of financial support being these inter-budget transfers, in accordance with procedures established by the Federal Treasury.

A similar provision is provided in paragraph 6 of Article 10 of Federal Law No. 359-FZ dated December 14, 2015 "On the federal budget for 2016."

The procedure for territorial offices of the Federal Treasury to exercise powers of recipients of funds of the subject of the Russian Federation budget in 2015 to transfer inter-budget transfers provided from the budget of the subject of the Russian Federation to the local budget in the form of subsidies, subventions and other targeted inter-budget transfers has been approved by Order No. 3n of the Federal Treasury dated February 16, 2015 "On Approval of the Procedure for Territorial Offices of the Federal Treasury to Exercise Powers of Recipients of Funds of the Subject of the Russian Federation Budget in 2015 to Transfer Inter-Budget Transfers Provided from the Budget of the Subject of the Russian Federation to the Local Budget in the Form of Subsidies, Subventions and Other Targeted Inter-Budget Transfers."

Forms of applications for refund/offset of overpaid (collected) tax amount (fee, penalty, fine) have been approved by Order No. MMV-7-8/90@ of the Federal Tax Service dated March 3, 2015.