Suspension of bank account operations

Checking account blocking: purposes and reasons

The procedure for suspending bank account operations is often applied by the tax inspection. Such actions are aimed at ensuring that the taxpayer fulfills all obligations. In fact, all the entrepreneur's accounts are frozen. You can find out the exact reason for the blocking by contacting the tax service. Possible reasons include: 

• accrued penalties and taxes are not paid by the organization; 
• the entrepreneur submits declarations late; 
• the organization fails to comply with requirements for ensuring electronic document management;
• blocking after an on-site audit. 

If penalties, fines, and taxes are assessed against an organization following an on-site audit, the tax inspection has the right to issue a decision prohibiting the alienation of certain types of the organization's property without its consent. After that, the inspection can block funds in bank accounts within the amount of the accrued debt that is not covered by the value of said property. All cases of account blocking are described in detail in the Tax Code of the Russian Federation. 

Tax authorities may also block a checking account in other cases, for example, if there are suspicions that an organization with a debt is concealing property when there is an opportunity to cover the debt at its expense. 

How account blocking occurs

The blocking process is as follows: 

• The tax service issues a decision to block the account of an individual entrepreneur or legal entity. 
• The decision is sent to the bank.
• A copy of the decision is received by the account holder, who signs the notification.
• The banking organization blocks the account, notifies the tax service, and reports the amount of money remaining in the debtor's account. 

Blocking at the bank becomes effective from the moment it is notified of the tax inspection's decision to suspend account operations until receipt of a notification of cancellation. The decision is made by the head or deputy of the Federal Tax Service. The form of the decision is approved by order, it is sent to the bank electronically, and a copy is provided to the company's representative against receipt. 

Reasons for checking account blocking

List of the main reasons for checking account blocking:

1. A legal entity or individual entrepreneur fails to transfer tax payments to the budget on time (clauses 1, 8 of Article 69, clause 2 of Article 76 of the Tax Code of the Russian Federation). 
2. Tax returns are not submitted or are submitted with a delay of more than 10 days (clauses 1, 3 of Article 76 of the Tax Code of the Russian Federation).  
3. Tax authorities lost the tax reporting of the organization or entrepreneur. 
4. An amended return was submitted late. 
5. An error was made in the payment order, and the CBC (budget classification code) was specified incorrectly. 
6. The legal entity is missing at the address registered in the charter documents.
7. During the desk audit, the requested documents were not presented to the commission members. 

Other grounds for freezing accounts are not provided for in the Tax Code. That is, if accounting reports are not submitted on time, the suspension of operations does not apply. 

The rules applied in accordance with Art. 76 of the Tax Code of the Russian Federation concern taxpayers and apply to: 

• tax agents; 
• individual entrepreneurs; 
• organizations and individual entrepreneurs that are not taxpayers; 
• notaries and lawyers engaged in private practice.

If a company whose accounts are blocked by the tax service ceases to exist due to reorganization, the block applies to the successor's accounts, in accordance with FNS Letter No. ED-4-8/16327 dated September 2, 2016. 

What consequences blocking entails

The negative consequences of an account block can be quite serious. Most importantly, the suspension of operations prevents companies from conducting business actively and efficiently. Due to the freezing of accounts, the organization becomes "frozen" and cannot carry out any debit transactions or settle accounts with partners, which leads to losses. If an account is blocked, debit transactions are prohibited, and funds cannot be transferred to a counterparty from it. 

Since December 2014, a decree has entered into force according to which, upon the suspension of account operations by decision of the tax inspection, banks do not have the right to open new accounts, deposits, or fixed deposits for this company. The rule applies not only within the bank where the client was serviced, but also to other financial organizations. 

Consequently, the suspension of bank account operations leads to the following problems: 

• it is impossible to conduct settlement operations; 
• it is impossible to settle accounts with counterparties, as a result of which funds can be lost; 
• there may be problems when opening a new account in another bank. 

This is why you must not "ruin relations" with the tax inspection. Any mistakes can cause the current account to be blocked and lead to losses for the company. 

Which debit transactions cannot be blocked

There are debit transactions that cannot be blocked. These include: 

• payment of severance pay and wages; 
• making payments for alimony obligations; 
• transfers for insurance contributions and accrued fines; 
• making payments related to compensation for harm to health. 

Based on this, the suspension of account operations does not apply to payments for transferring taxes, fees, penalties, and insurance contributions to the budget. This means that even if the account is blocked, the company can send instructions to the credit organization to transfer taxes and fees, fund contributions to the budget, and the bank is obliged to execute such instructions. 

It is also impossible to block payments whose priority, according to civil legislation, precedes the obligations to pay taxes, fees, fines, and penalties. According to the norms of the Civil Code of Russia, payments via bank accounts must be made in the following order: 

1. Under executive documents for compensation for harm caused to health and life, and claims for the recovery of alimony – the first priority. 
2. Calculations for the payment of wages, benefits to dismissing employees, and remuneration to authors who have shown results of intellectual activity – the second priority. 
3. Wages to working employees, fulfillment of instructions from tax inspections and extra-budgetary funds (payment of taxes, fees, and other mandatory payments) – the third priority. 

Consequently, the bank will unconditionally carry out the listed operations in the established order of priority, despite existing prohibitions. 

What to do if an account is frozen

If an account is blocked, its owner should contact the tax service to find out the reason for the block. Next, depending on the reason, a method for resolving the problem is chosen. If the organization has not fulfilled the necessary requirements, it is necessary to provide all receipts that will confirm the payment of all fees in the required amount. 

If the reason for the block is violated document flow, you must appear at the inspection in person and provide appropriate explanations. If the freeze occurred due to the untimely submission of documents, it is enough simply to present the reports to the tax service. After fulfilling all requirements, the tax service will promptly respond and lift the ban on conducting operations on the accounts. 

The suspension of bank account operations is a kind of tool of the tax service that makes it possible to exert influence on unscrupulous entrepreneurs. In the event of an account block, conducting operations becomes impossible, and companies incur losses. After eliminating the discrepancy, the tax service sends a request to banks again with instructions to unfreeze a specific account.