2 reasons to NEVER pay your credit card with cash

2023-05-06 05:09:18

Written in MONEY he 5/5/2023 · 10:13 hs

Even though the Tax Administration Service (SAT) no longer charges a Tax on Cash Deposits, Banks have the obligation to report to the Treasury on a monthly basis the cash deposits made by taxpayers to the Credit cards.That is, banks must inform the SAT before the 17th of each month the deposits received by taxpayers.

This measure seeks to speed up and make audits more efficient and, therefore, combat tax evasion more expeditiously. This measure only applies to accounts that exceed, per month, the cash deposits of 15 thousand pesos, in accordance with the provisions of the Income Tax Law, in section IV of Article 55.

Remember that in years past, the SAT charged a tax on those deposits. However, the tax authority now does not charge cash deposits as this tax was removed with the tax reform that came into effect in 2014.

Payments or transactions that are not monitored and are not taxed on them:

• Expenses of parents and children.
• Payments for products sold by catalog, such as cosmetics, kitchen utensils, household items, among others.
• Tandas and personal loans.
• The previous confusion was generated as a result of the proposal made by the Treasury to include in the 2022 Economic Package that banks deliver information related to cash deposits on a monthly basis and not annually, as is currently handled.

use of cash

The tax evasion may lead people to resort more to the use of cash in their transactions, while carrying out transactions using means of payment other than cash limits the possibilities of the taxpayer to evade compliance with their tax obligations, due to the fact that the tax authorities have more tools to track their operations and, at the same time , both the evading taxpayer and the potentially evading taxpayer perceive the risk that this conduct represents.

Therefore, making payments in cash could cause you problems with the SAT.

when the SAT cannot corroborate the origin of the money that the taxpayers have or detects that the expenses are greater than the income, then it can enter into tax discrepancy, This is where the institution could resort to reviewing income, statements, expenses, etc. to know where the surplus comes from.

The taxpayer will have a period of 20 days to demonstrate the origin of that money, otherwise he would be committing a crime and the sanctions range from a fine to pay the excess ISR to prison from three months to five years.

better not pay cash

1. The SAT could review you for falling into the assumption of tax discrepancywhich is when your expenses and investments are greater than your income declared in the year
2. Banks have the obligation to inform the SAT about those people who receive more than 15,000 in cash per month. As there is no way to verify where the cash with which you pay your cards comes from, the SAT and other tax authorities could exercise their verification powers to review the origin of those resources and determine a tax credit.

What is the penalty for tax discrepancy?

In the event that the tax authorities detect that a person’s income does not match what they are paying in ISR, the tax authority may use all available information about the person to conduct a review (files, statements and information from third parties).

Once the file has been made, the authority will inform the person of the amount of the disbursements, the information they have to validate that, where they got it from and how much ISR must actually be paid.

After that notification, the person will have only 20 days to write a report in which he argues in detail where those “surpluses” come from, as well as offer evidence that the taxes owed were actually paid.

Here are two:

• If everything can be justified, nothing will happen.
• If it is not achieved, the excess ISR will have to be paid and an extra fine.

*The problem is that the consequences of the tax discrepancy are not only monetary, in some cases the authorities can accuse the person of tax fraud, a serious crime that warrants three months to nine years in prison.