Artigos e Alertas
Brazilian Revenue Service publishes rule about tax liability of third parties
The Brazilian Federal Revenue Service (“RFB”) has recently published Normative Ruling No. 1,862, a rule that allows tax authorities to hold third parties (other than the taxpayer) liable for tax liabilities, including partners and managers of the corporate taxpayer.
The Normative Ruling No. 1,862 establishes that tax inspector from RFB may hold third parties jointly liable in three distinct occasions: (i) at the constitution of the tax debt (issuance of the Notice of Infringement, for example); (ii) before the decision by the administrative court, and (iii) after the definitive constitution of the tax debt.
This means that RFB has the power to hold third parties liable even after a final judgment from the Administrative Council of Tax Appeals (“CARF”).
In the case of imposition of tax liability after the final decision from CARF, the third party can only take his/her case to the tax inspector and to the chief of the Regional Superintendence of the RFB, without being able to challenge it at CARF. Also, the third party will only be able to question the nexus between his/her liability and the facts that generated the tax infraction, without challenging the grounds for the tax assessment.
Such provisions are a defense restraint and a illegal elimination of the double degree of jurisdiction in the tax administrative procedures.
Normative Ruling No. 1862 also allows tax authorities to impose tax liability to third parties upon rejection of tax offset statements by the RFB. In this sense, third parties may be held liable for the wrongful offsetting of tax credits.
This provision allows, for example, the RFB to hold partners and managers of the legal entity jointly liable for the utilization of controversial tax credits.
Partners, managers or representatives of legal entities should consult their legal advisors to analyze the risks associated with this new ruling and adopt the appropriate measures to mitigate such risks.
Candido Martins Advogados is at your disposal should you need any clarification.