IIT Comprehensive Income Annual Reconciliation — Illustrative Cases

个人所得税综合所得汇算清缴提示案例

Source (Chinese): STA Policy Database — 政策解读 (Income Tax Division, February 26, 2025)

English translation: Independent translation. Not an official government translation.

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Part I: Convenience Tips — Remember Your Personal Information

Case 1: Remember Your APP Password for a Smooth Reconciliation

After the IIT annual reconciliation period began, Xiao Zhao saw that his colleagues had received tax refunds and was eager to check his own situation. However, when he opened the IIT mobile APP, he was stuck — "What's my password?" It turned out that after not logging in for a year, he had completely forgotten his password. Xiao Zhao quickly noticed the "Forgot Password" option in the bottom-right corner, completed a few simple steps to recover his password, and successfully finished his annual reconciliation.

Reminder: The IIT annual reconciliation period runs from March 1 to June 30 each year. We recommend remembering your IIT mobile APP password, or using biometric features (fingerprint, facial recognition, etc.) to help store your password. If you forget your password, do not worry — tap Forgot Password on the APP login page to reset it. Generally, you only need to enter your identity information and choose verification via your linked mobile number or personal bank card. Once verified, the new password is set. In rare cases where the above methods do not work, you can visit the nearest tax service hall with valid identification to reset your password.

Case 2: Accurate Bank Card Details Are Essential for Timely Refunds

Following the schedule notified by his company's finance department, Xiao Qian and his colleagues completed their annual reconciliation. He was eligible for a RMB 300 tax refund. Xiao Qian happily submitted his refund application but then got busy with work and did not follow up, nor did he promptly check the "bank card verification failed" notification sent by the tax authority via SMS and the APP's in-app messaging. As a result, while his colleagues all received their refunds, his refund failed.

Reminder: Incorrect or invalid bank card account information is one of the main reasons for refund failures. The bank card added for a refund must be one opened by the taxpayer personally within China. We recommend using a Class I account (a Class I account is a full-function bank settlement account that supports deposits, withdrawals, transfers, payments, and cash withdrawals; using a Class II or other account may risk the refund amount exceeding the account's daily transaction limit, preventing successful refund). Keep the bank card in active status. Please note that the tax authority will never request bank account details or other sensitive information via SMS or unofficial software. If in doubt, call the 12366 taxpayer service hotline, or leave a query via Personal Center - I Want to Consult in the IIT APP.

Case 3: Do Not Click Suspicious Links — Protect Your Information

Recently, taxpayer Xiao Sun received an email claiming to be an official IIT annual reconciliation notice from the STA, stating that "you can scan a code to receive a refund of 70% of your total tax paid over the past three years." After clicking the link, it redirected to a sophisticated fake STA website. Xiao Sun was about to click to apply but then recalled that he had already completed his annual reconciliation last year — why would he need to do it again? He called the 12366 taxpayer service hotline. The tax officer explained in detail that the email was likely a scam and that follow-up steps would ask for bank card numbers, phone numbers, verification codes, and other personal information. Xiao Sun broke into a cold sweat and immediately deleted the email.

Reminder: Taxpayers can complete their annual reconciliation through the IIT mobile APP, the Natural Person Electronic Tax Bureau website (https://etax.chinatax.gov.cn), or by visiting a tax service hall in person. They may also have their employer or entrust another institution or individual to handle it on their behalf. The tax authority will never authorize any other so-called "electronic" channels. Taxpayers should exercise caution and must not be enticed by claims of "large refunds" into clicking unknown links, to avoid information leaks and financial losses.

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Part II: Clarifications by Category

Case 4: Multiple Income Sources Combined — Both Additional Tax and Refunds Are Possible

Taxpayer Xiao Li had annual wages and salaries of RMB 350,000 and received RMB 20,000 in author's remuneration from publishing articles in magazines. After deducting eligible expense deductions and various deductions, he discovered during the annual reconciliation that he owed an additional RMB 560 in tax. Xiao Li felt that taxes had already been paid on both his wages and his author's remuneration by his employer and the magazine publisher, so there should be no need to pay more. Moreover, most of his friends received refunds — why did he have to pay additional tax? He therefore delayed filing his annual reconciliation. After the tax authority discovered this, they explained the tax policy to him and urged him to promptly complete his additional tax filing.

Reminder: After the new Individual Income Tax Law took effect in 2019, China began implementing a combined comprehensive and categorical IIT system. The four categories of comprehensive income earned by resident individuals — wages and salaries, remuneration for personal services, author's remuneration, and royalties — require an annual reconciliation on the basis of taxes already prepaid: "identify gaps, aggregate income and expenses, calculate on an annual basis, and settle the difference." This system ensures that individuals with equal income levels within a tax year bear the same tax burden, promoting distributive fairness — a common international practice. Generally, when a taxpayer has remuneration for personal services, author's remuneration, or royalties in addition to wages and salaries, the combined income may push the applicable tax rate above the rate used during prepayment, resulting in additional tax due. Xiao Li's prepaid tax on wages and salaries was at the 25% rate, and his prepaid tax on author's remuneration was at the 20% rate. After combining them, the author's remuneration was also subject to the 25% rate, resulting in an additional tax of RMB 560. Having either additional tax to pay or a refund is normal in the annual reconciliation — taxpayers should view this calmly.

Case 5: Do Not Panic Over Unfamiliar Income — Verify Before Filing a Dispute

Professor Zhou was invited to attend a seminar and give a speech at a university. During the following year's annual reconciliation, he discovered a tax withholding record for remuneration for personal services from a certain association. Professor Zhou recalled that he had never participated in any activities of that association, and filed a "phantom income" dispute via the IIT APP. After the tax authority investigated, it turned out that the university seminar was actually organized by the association, and the speaking fee was paid and tax withheld by the association. Professor Zhou had filed an erroneous dispute because he was unaware of the arrangement.

Reminder: When taxpayers check their income and tax records through the IIT mobile APP and have questions about a particular payment, they should first contact the paying entity to verify the details. If the paying entity made a reporting error, they can file a corrected return on behalf of the taxpayer. If there is a genuine dispute about the income, the taxpayer may file a dispute regarding that income record. We recommend that taxpayers carefully read the dispute filing instructions, take responsibility for the truthfulness, accuracy, and completeness of the disputed information, and retain relevant supporting materials for follow-up verification by the tax authority.

Case 6: A Tax Refund Application Is Not the End — Providing Supplementary Materials Is Your Obligation

When filing his annual reconciliation, Xiao Wu added a RMB 10,000 charitable donation deduction based on last year's donations, but did not clearly fill in the recipient organization's name, donation receipt number, and other details. The tax authority noticed this during the refund review and contacted Xiao Wu multiple times, reminding him to enter the relevant information and upload donation receipts. However, due to various reasons, Xiao Wu did not timely supplement the donation information and receipts. Ultimately, the tax authority made a decision to deny the refund.

Reminder: During the annual reconciliation refund review, for items that taxpayers have reported unclearly or incompletely, the tax authority will contact taxpayers to supplement their filings or submit supporting materials. This is a measure implementing the "claim upon filing, retain materials for inspection" administrative service system, which is also common international practice. We recommend that taxpayers actively cooperate after receiving reminders from the tax authority and submit relevant materials as soon as possible, to facilitate timely receipt of refunds and quality service.

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Part III: File Honestly — False Reporting Will Be Investigated

Case 7: Trust Only Official Notices — "Refund Secrets" Are Unreliable

Xiao Zheng, an employee at a company, frequently browses social media platforms such as Douyin, WeChat Official Accounts, and Xiaohongshu. During the annual reconciliation period, he stumbled upon a short video in a WeChat group claiming that when filing the IIT annual reconciliation, individuals could add certain deductions to obtain a refund. Treating this "refund secret" as a treasure, Xiao Zheng followed the instructions without verifying whether the information was true. Shortly after, he received a notification from the tax authority reminding him to file truthfully. Xiao Zheng suddenly realized his mistake, quickly withdrew his refund application, corrected his filing, and remarked: "Being honest and truthful in filing is the right way."

Reminder: Since the IIT annual reconciliation system was implemented, some criminals have targeted taxpayers' eagerness to obtain refunds, promoting so-called "refund secrets" to attract clicks, traffic, and attention. The tax authority solemnly reminds taxpayers: do not trust various tax-related rumors circulating online. File your income and deductions truthfully in accordance with the law.

Case 8: "Serious Illness Medical Expenses" Is Not a "Money-Making Scheme"

Xiao Wang had substantial medical expenses from hospitalization last year. His company's finance department reminded him that he could claim the special additional deduction for serious illness medical expenses during the IIT annual reconciliation. Xiao Wang checked the National Medical Insurance Platform APP and found that his qualifying medical expenses totaled RMB 35,000. He reported them truthfully and promptly received his refund. He enthusiastically shared the good policy with his colleagues — but some got the wrong idea. Three other people in his office, having no medical expenses whatsoever, also reported RMB 35,000 in serious illness medical expense deductions and submitted refund applications. Instead of receiving refunds, they received messages from the tax authority requesting supporting documentation, and may face adverse records on their tax credit profiles.

Reminder: Filing the IIT annual reconciliation lawfully is every taxpayer's legal obligation. Believing so-called refund secrets or false claims will not only damage your tax credit through false filing, but may also expose your personal information to online fraud criminals. When filing, taxpayers should carefully review their income, deductions, and withheld taxes through the IIT mobile APP, and handle the reconciliation with integrity and in compliance with the law. For those who falsely report income or deduction items or tamper with supporting materials and other egregious violations, the tax authority will take strict action in accordance with the law, collecting back taxes and imposing late payment surcharges. For those who refuse to rectify, the authority will open an audit investigation in accordance with applicable laws and regulations.

Case 9: Children's Identity Information Must Be Truthful — Data Verification Is Inescapable

Xiao Feng and Xiao Chen are a newly married couple who do not yet have children. However, during the annual reconciliation, Xiao Feng entered the identity information of a colleague's child to claim the special additional deduction for children's education, in order to reduce his tax payment. The tax authority discovered during the annual reconciliation that the special additional deduction information he reported showed irregularities and sent an SMS asking him to correct the filing or provide supporting materials. With a sense of luck, Xiao Feng ignored the tax authority's reminders. The tax authority then called him, explained the policy requirements again, and clearly informed him of the problem and the legal consequences he would face. When Xiao Feng continued to neither correct the information nor provide supporting materials, the tax authority lawfully suspended his eligibility for the special additional deduction.

Reminder: A small number of taxpayers file false special additional deduction claims during the annual reconciliation to obtain larger refunds or reduce their tax payments. To establish a complete IIT administration loop, the tax authority has established children's education information verification mechanisms with relevant departments, using tax big data to analyze taxpayer filings. When tax-related risks are identified, the tax authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 10: Verify Housing Purchase Information Carefully — Only Claim When Eligible

Xiao Cao sold his original property in 2024 to improve his living conditions and then purchased a new one. When he tried to claim the housing loan interest special additional deduction using the new mortgage contract number, the system indicated that it did not meet the "one-time only" filing condition. Xiao Cao then had a dishonest idea: he dug out the mortgage contract from the property he had already sold, and — despite knowing the mortgage on that property had been fully repaid at the time of sale — continued to file using that old contract number. Before long, the tax authority detected the problem during review, informed Xiao Cao that the mortgage contract had been verified as fully repaid, and requested supporting materials. Xiao Cao immediately understood the situation and promptly withdrew his filing.

Reminder: A small number of taxpayers, in order to take additional advantage of the housing loan interest special additional deduction, violate Article 14 of the Interim Measures for Special Additional Deductions of Individual Income Tax — which provides that "a taxpayer may only claim the interest deduction for a first home mortgage once" — by continuing to file under the old mortgage contract number after selling their home and taking out a new mortgage, thereby circumventing system verification. The tax authority has established a housing loan interest special additional deduction verification mechanism with relevant departments to verify whether taxpayer mortgage interest information meets the conditions. For taxpayers who falsely report the housing loan interest deduction, the tax authority, in conjunction with information verification by other departments, will also use tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 11: Homeowners Cannot Continue to Claim the Housing Rental Deduction

Xiao Wang purchased a property in his work city (a provincial capital) at the beginning of 2024. After reviewing the special additional deduction policies, he felt that switching from the housing rental deduction of RMB 1,500 per month (which he had been claiming before buying the property) to the housing loan interest deduction of RMB 1,000 per month would be a loss. So he continued to claim the housing rental deduction for 2024. Shortly afterward, the tax authority contacted him, informing him that their records confirmed he owned property in the city. Xiao Wang was startled — "They can even check that?" He promptly corrected his filing to the housing loan interest deduction.

Reminder: A small number of taxpayers continue to claim the housing rental special additional deduction even after purchasing a property and incurring mortgage interest, in violation of the regulations. The tax authority has established a real estate registration information verification mechanism with relevant departments to verify taxpayer eligibility. For taxpayers who falsely report the housing rental special additional deduction, the tax authority, in conjunction with information verification by other departments, will also use tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 12: Continuing Education Has a Specific Catalog — Filing at Will Carries Risks

Xiao Duan works at a hospital and, as required by the industry, completed training on a certain website and obtained a training completion certificate. After casually hearing from a colleague that continuing education expenses could be deducted from IIT, Xiao Duan — without checking the specific policy provisions or consulting the tax authority — mistakenly assumed that the training completion certificate qualified for the IIT continuing education special additional deduction. A few days later, the colleague reported that the tax authority had already called requiring corrections: the vocational qualification education deduction applies only to certificates obtained within the year that appear in the National Vocational Qualification Catalog. A training completion certificate from a website does not qualify as a vocational qualification certificate under the Catalog and does not meet the conditions for the IIT continuing education special additional deduction. After hearing this, Xiao Duan promptly corrected his own information as well.

Reminder: Certain industries require their personnel to undergo continuing education. Some taxpayers may mistakenly believe that any continuing education qualifies for the IIT special additional deduction due to insufficient understanding of the policy. The tax authority has established a vocational qualification certificate verification mechanism with relevant departments to verify taxpayer eligibility. For taxpayers who falsely report the continuing education special additional deduction, the tax authority, in conjunction with information verification by other departments, will also use tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 13: Do Not Fabricate Elderly Dependents' Information — Know the Rules First

Xiao Chu is 25 years old. During the annual reconciliation, seeing his older colleagues receive refunds through the elderly dependent care deduction, he was envious — but neither of his parents had yet reached age 60, so he did not meet the filing requirements. Xiao Chu had a "bright idea" and entered his grandmother's information as if she were his mother to claim the elderly dependent care deduction, feeling secretly pleased. A few days later, the tax authority detected the anomaly during the refund review and requested that Xiao Chu provide supporting materials. Knowing he was in the wrong, Xiao Chu quickly withdrew his refund application and corrected his annual reconciliation filing.

Reminder: The elderly dependent care special additional deduction has specific filing conditions: primarily, if the supported person is a parent, at least one parent must be aged 60 or above. Only if both of the taxpayer's parents and their siblings have all passed away, and the taxpayer is fulfilling the obligation to support grandparents, may the taxpayer claim the elderly dependent care deduction. For taxpayers who falsely report the elderly dependent care special additional deduction, the tax authority, in conjunction with information verification by other departments, will also use tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 14: Commercial Health Insurance Requires Verification — Exercise Caution with Other Deductions

Xiao Huang purchased a critical illness insurance policy and was told by the sales agent at the time of purchase that it could be deducted from IIT. Without carefully understanding the policy provisions, and without a tax preference identification code, Xiao Huang randomly entered an identification code and reported the contract details as an IIT deduction. Shortly afterward, he received a call from a tax officer: only commercial health insurance products that meet the requirements can be deducted from IIT — specifically, health insurance products developed by insurance companies in accordance with the framework and model provisions for individual tax-advantaged health insurance products that meet the qualifying conditions. If a commercial health insurance product purchased by an individual does not have a tax preference identification code, the expenditure cannot be deducted before tax. The product Xiao Huang purchased had no tax preference identification code and did not qualify for IIT deduction. After hearing this, Xiao Huang quickly explained that he had been misled, and promptly corrected the relevant information.

Reminder: Claiming a commercial health insurance deduction has certain prerequisites — only qualifying commercial health insurance products may be deducted from IIT. When claiming this deduction, taxpayers should check whether their insurance policy has a tax preference identification code. For taxpayers claiming commercial health insurance deductions, the tax authority, in conjunction with information verification by other departments, will also use tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 15: Tax Benefits for Disabled Persons Exist — But Fraudulent Registration Will Be Verified

When filing his IIT annual reconciliation, Xiao Liu got a dishonest idea. After reviewing the local preferential IIT policies for disabled persons, he falsely registered a disability tax benefit on the IIT APP, fraudulently obtaining a tax reduction. He was secretly pleased with himself. Before long, the tax authority called: after information verification with relevant departments, the disability certificate information you reported is incorrect and does not meet policy requirements; please bring relevant documents to the tax office for verification. At the tax office, Xiao Liu admitted to the false filing. The tax authority lawfully collected the outstanding tax and imposed a tax penalty. Xiao Liu deeply regretted his actions: "Paying tax lawfully is one's duty — I should never have tried such tricks."

Reminder: The Individual Income Tax Law provides that income earned by disabled persons may be subject to reduced IIT — this is a special preferential policy granted by the state to special groups. Falsely registering a disability certificate to enjoy tax benefits not only violates tax law but is also unfair to persons with disabilities. The tax authority has established information verification mechanisms with relevant departments and regularly uses tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 16: Review the Policy Before Claiming Benefits — Failure to Read the Rules Has Consequences

Taxpayer Xiao Kong and his spouse, in previous years, when claiming the special additional deduction for childcare of children under age 3, did not review the specific provisions of the policy and each claimed 100% of the deduction for the same child. The tax authority subsequently discovered this issue during a random inspection and required Xiao Kong and his spouse to make corrections promptly and pay back taxes plus late payment surcharges. Xiao Kong felt aggrieved and posted on a social media platform claiming "I refuse to accept the surcharge." A tax official explained to him the provisions that "the tax authority may conduct random inspections of the special additional deduction information provided by taxpayers" and that "taxpayers shall be responsible for the truthfulness, accuracy, and completeness of the special additional deduction information they submit," and criticized and educated him about his behavior. Only then did Xiao Kong realize his mistake. He carefully reviewed the tax policy provisions, promptly paid the back taxes and surcharges, and removed the relevant posts from the platform.

Reminder: The Individual Income Tax Law provides that taxpayers shall be responsible for the truthfulness, accuracy, and completeness of the special additional deduction information they submit. When claiming tax reductions, exemptions, or other preferential tax policies, taxpayers should carefully review the policy provisions before filing to confirm they meet the conditions, and avoid erroneous or fraudulent claims that result in surcharges. The tax authority has established information verification mechanisms with relevant departments and regularly uses tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

Case 17: Exemption from Reconciliation Has Conditions — Lawful Withholding Is a Prerequisite

Taxpayer Xiao Peng noticed the provision that allows qualifying individuals to be exempt from the comprehensive income annual reconciliation and came up with what he thought was a "great" plan. Since his wife's income was slightly over RMB 110,000, he first had his wife claim the children's education special additional deduction during regular withholding. After the reconciliation period began, he had his wife cancel the children's education deduction and file her annual reconciliation to qualify for the exemption from filing, while he himself newly claimed the children's education deduction to enjoy the tax benefit. This way, both he and his wife would "fully" enjoy the deduction during both the regular withholding period and the reconciliation period. Xiao Peng thought his plan was flawless and felt rather pleased. But a few days later, his wife received a call from the tax authority informing her that she did not qualify for the exemption from filing, because the special additional deductions claimed during regular withholding were inconsistent with her own filing, which did not meet the prerequisite of lawful prepayment withholding. She was required to pay back taxes in accordance with the law. Xiao Peng sighed: "All that effort, and the result was..."

Reminder: To effectively reduce taxpayer burdens and continue releasing the benefits of reform, the relevant provisions specifically exempt certain low-to-middle income taxpayers who owe additional tax from the annual reconciliation obligation. However, when a taxpayer's comprehensive income was obtained under circumstances where the withholding agent did not lawfully prepay and withhold taxes — such as through canceling certain deduction items or adjusting income — the exemption from annual reconciliation does not apply. The tax authority regularly uses tax big data for analysis. When tax-related risks are identified, the authority communicates with taxpayers, guiding them to correct errors and improve compliance. For those who refuse to make corrections, the tax authority will take action in accordance with applicable laws and regulations.

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Part IV: Do Not Delay — Failure to Complete the Reconciliation Has Consequences

Case 18: Overseas Income Must Be Declared — Do Not Harbor Illusions of Concealment

Xiao He was seconded by a domestic enterprise to work at an overseas subsidiary for three years. Every year before the end of February, the enterprise reported the seconded personnel's information to the tax authority. During the annual reconciliation period, the company reminded Xiao He that he should declare his overseas income for IIT in China, but he took a chance, believing that his long overseas posting meant he would never be discovered, and did not file the overseas income reconciliation. When the tax authority's big data analysis detected that Xiao He had several hundred thousand RMB in undeclared overseas income, it issued a notice ordering rectification within a specified period. Xiao He paid back taxes and late payment surcharges. His company also criticized and educated him upon learning of his failure to report truthfully.

Reminder: The requirement for resident individuals to self-declare and pay tax on overseas income has been a fundamental principle since the Individual Income Tax Law was first implemented in 1980. The 2018 revised Individual Income Tax Law continues this provision: resident individuals shall pay IIT in China on income derived from both within and outside China in accordance with the law.

Case 19: Refund Applications Should Be Timely — Delays Damage Your Rights

Taxpayer Xiao Lv had multiple payments of remuneration for personal services in tax year 2019, causing the withholding tax rate to be higher than the applicable rate for the 2019 annual reconciliation. Under tax law, he was entitled to a refund through the annual reconciliation. However, Xiao Lv was too busy with work, and despite multiple reminders from his employer, he did not take action. In the second half of 2024, he happened to open the IIT mobile APP and remembered the tax authority's reminder. When he attempted to submit the 2019 annual reconciliation refund application, the system notified him that the refund application had exceeded the statutory limitation period under the Tax Collection and Administration Law. Xiao Lv was deeply regretful.

Reminder: Filing the annual reconciliation truthfully and in accordance with the law is every taxpayer's obligation. Under the Tax Collection and Administration Law, taxpayers who discover within three years from the date of tax settlement that they have overpaid may request a refund from the tax authority. For taxpayers who are eligible for refunds, we recommend confirming your income and deductions, promptly submitting a refund application, and monitoring the tax authority's refund review status to avoid missing out on refund benefits. Starting July 1, 2025, the tax authority will no longer accept refund applications for the 2021 tax year annual reconciliation. Eligible taxpayers should complete their reconciliation and apply for refunds in a timely manner to avoid affecting their lawful rights and interests.

Case 20: Paying Additional Tax in the Reconciliation Is an Obligation — Failure to File Will Be Penalized

Taxpayer Xiao Zhang held positions at multiple employers and also received a large amount of author's remuneration, causing the withholding tax rate during the year to be lower than the applicable rate for the annual reconciliation. Under tax law, he was required to complete the annual reconciliation and pay additional tax. When it came time to reconcile, Xiao Zhang opened the IIT mobile APP, took one look, saw that he owed a substantial amount of additional tax, figured the tax authority might not find him, and kept postponing the filing. In August 2023, after repeated reminders proved ineffective, the tax authority lawfully issued a notice ordering rectification within a specified period. Upon receiving the notice, Xiao Zhang said regretfully: "If I had known, I would have filed earlier — I did not save any tax, and now I have a late payment surcharge on top."

Reminder: Filing the annual reconciliation truthfully and in accordance with the law is every taxpayer's obligation. For taxpayers with outstanding issues such as failure to file the reconciliation, the tax authority will issue reminders, urge rectification, conduct warning interviews, and send tax documents via electronic and written means to remind and urge taxpayers to make corrections. For taxpayers who refuse to rectify or whose rectification is incomplete, the tax authority will initiate an audit investigation in accordance with the law, impose penalties in addition to collecting late payment surcharges, and add the taxpayer to the tax surveillance priority list, subjecting their filings to enhanced review for the following three tax years.