Tax Administrative Litigation and the Year-End Recess

As the end of the year approaches, discussions regarding the recess of forensic activities resurface, including the suspension of deadlines and notifications, as well as the suspension of hearings and trials, as a way to provide tranquility and legal security to legal professionals, especially lawyers involved in judicial litigation.

The issue is undeniably relevant, having a direct and immediate impact on the work of lawyers and parties involved in any legal proceeding. So much so that the draft of the new Code of Civil Procedure included an express provision in its article 220, aiming to uniformly regulate the stipulation of the recess period, between December 20th and January 20th. (PLS SCD 0166/2010)

A situation of similar potential for harm, which has not received due attention, refers to the establishment of a recess period in the counting of deadlines and the performance of acts within the scope of tax procedures in the administrative sphere, that is, in the so-called administrative tax litigation.

Indeed, the tax authorities’ zeal for revenue collection, coupled with a lack of adequate organization, ends up generating a significant accumulation of tax assessments at the end of each fiscal year, since the Public Authority often seeks to avoid the expiration of the statute of limitations, which would ultimately eliminate the possibility of pursuing the tax debt.

As a direct consequence of this reality, taxpayers are surprised by these ‘Christmas gifts’ sent by the Finance Departments at all levels (Federal, State, and Municipal), finding themselves obliged to call upon various collaborators, lawyers, and accountants to gather the relevant documentation, analyze the assessments and tax decisions, so that they can present their defenses, objections, and appeals in the administrative sphere, under penalty of preclusion of the exercise of their right to defense.

This circumstance, obviously, generates enormous legal uncertainty and even undermines the principles of equity and the principle of no surprise for taxpayers, as they are placed at a disadvantage by having their ability to defend themselves fully and comprehensively diminished, since at this time of year their capacity for mobilization is impaired.

It is well known that, during this holiday period, many companies, law firms, and accounting firms tend to suspend their activities, including granting collective vacations to their members, allowing for family time and a period of rest and reflection before resuming activities at the beginning of the following year.

Sensitive to this problem, the São Paulo Lawyers Association (AASP) approached the City Council of the State Capital, through councilman Marco Aurélio Cunha, resulting in the drafting of Bill No. 356/2014, which aims to suspend the deadlines for submitting defenses, objections, and appeals within the scope of administrative tax procedures involving the municipality, from December 20th to January 10th.

It is important to emphasize from the outset that no harm will be caused to public funds with the approval of this bill, as the tax authorities may continue to issue their assessments and notices of infraction normally, including to prevent the statute of limitations from running, since only the running of the deadlines granted to taxpayers will be suspended.

At the federal level, a similar measure is the subject of Bill No. 1159/2011, which is currently being processed in the Chamber of Deputies, after having been approved by the Federal Senate, where it originated (PLS 481/2008), and already has a favorable opinion from the Committee on Labor, Administration and Public Service.

However, despite the relevance of the subject and the priority given to this Bill, no progress has been observed since 2011, awaiting only analysis by the Committee on Finance and Taxation and the Committee on Constitution, Justice and Citizenship.

These proposals, without a doubt, deserve support from the entire legal community, as well as from taxpayer and citizen advocacy organizations, since they will enable the full exercise of the right to defense in the sphere of administrative tax litigation.