Limitation of the right to take a decision of the tax authority and limitation of the tax obligation

Limitation is an event which has certain legal effects related to the passage of time. Under the provisions of the Law of 29 August 1997 - Tax Ordinance 1 (This may be because the tax liability will not arise at all or it will expire.

In the light of the current O.P., the limitation of the right to take decisions can be distinguished 2 and limitation of the tax liability 3 .

What changes to the suspension of the limitation period and the limitation period of collection are foreseen in the proposed new regulation against the background of the existing regulation Tax Ordinance?

1. Limitations of the right to take a decision

The limitation period for the right to issue a decision is closely linked to the way in which the tax liability to service the decision of the tax authority to the entity concerned arises. The date of notification of the decision is the date of the tax liability 4 .

In that case, a tax liability shall not arise if the decision establishing that undertaking has been served after 3 years from the end of the calendar year in which the tax obligation arose.

In practice, this means that the tax authority has 3 years from the end of the calendar year in which the tax obligation arose for the adoption and service of the determining decision. Failure to comply with the decision within that time limit causes the right to issue the decision to expire and the tax liability does not arise at all.

Consequently, if a tax liability arose in the property tax 1 January 2019, This tax authority has until the end 2022 for the issue and service of decisions.

2. Extension of the time limit until the decision fixing the tax

Tax Ordinance provides for cases where the time limit for decision is extended — from 3 to 5 years. This includes:

• 1) where the taxable person has not made a declaration within the time limit laid down in the tax legislation or in the declaration, has not disclosed all the data necessary to determine the amount of the tax liability,
• 2) additional liability in VAT,
• 3) tax liability for taxation of so-called undisclosed income.

Please indicate that the above mentioned 3-summer 5-the time limit for the delivery of the decision is not possible. It may be suspended only In one where the decision is subject to the decision of another authority or court.

The suspension of the limitation period shall then continue until the date on which the decision of another authority became final or the decision of the court was final, but no longer than by 2 years 5 . The limitation period for the right to issue the determining decision shall not be interrupted.

It is important that the deadline for the final decision is not required. It is sufficient that the decision of the Authority be served first instances. This view is confirmed by the case law of the administrative courts.

In this case, it is based on the view of some of the representatives of the doctrine, according to which, in the case of the appeal body, no obligation arises, but the correct determination of its amount, which was constituted by the service of the decision of the body first instances.

However, this applies to cases where the appeal body issues a reform decision (for the benefit of the party).

3. Limitation of the tax liability

The limitation is the so-called inefficient way of terminating the tax obligation, which means that despite the lack of payment it will effectively expire. After a certain deadline, the tax liability ceases to exist. The Authority cannot then effectively demand payment.

The voluntary payment by the taxpayer shall give rise to an excess payment to be recovered from the taxpayer. The expiry of the obligation in this case shall be by law. There is therefore no need (there is no legal basis in this respect) for any decision of the Authority 6 .

The limitation institution shall have a primary protective function as regards legal certainty. It is also intended to exclude claims which, due to the considerable passage of time, could be detached from the actual situation in which the taxpayer is situated. According to Article 70(1) o.p.

the tax liability expires on expiry 5 years from the end of the calendar year in which the tax payment deadline expired. This deadline shall be valid from the end of the year in which the tax payment deadline expired.

This means that if a taxable person who is a natural person had until the end of April 2019 for the payment of income tax, this limitation period will come to an end 2024 The limitation period may be suspended or interrupted.

The two regulations contain rules which are unfavourable to the taxpayer, since in practice they extend the time when the tax authority may pay the tax.

The cases of suspension and interruption of the limitation period are exhaustively listed in the regulations of the General Court. Article 70(2)(6)(7) o.p. the limitation period does not begin and the commenced period is suspended, inter alia, from:

1. a decision on the postponement of the period of payment of the tax or arrears, or the distribution of the tax or arrears in instalments, together with interest until the date of payment of the deferred tax or tax arrears, the last instalment of the tax or the last instalment of the tax arrears;
2. Initiating the procedure fiscal criminal offence or fiscal misdemeanour, which has been notified to the taxable person if the suspicion of a criminal offence involves failure to fulfil that obligation;
3. to bring an action before the administrative court on a decision relating to that obligation;
4. the provision of the provision on the acceptance of the security (e.g. bank guarantee, bank guarantee, bank guarantee note) or the provision of the provision of the security under the rules on enforcement in the administration.

In certain cases, the limitation period shall begin to run and, after suspension, shall continue from the day following:

• 1) final termination of the procedure fiscal criminal offence or fiscal misdemeanour,
• 2) to provide the tax authority with a copy of the administrative court’s ruling, stating its validity,
• 3) the validity of the decision of the ordinary court to establish the existence or non-existence of a legal relationship or law,
• 4) the expiry of the security decision,
• 5) the completion of the safeguard procedure under the law on enforcement in the administration.

However, the limitation period shall be interrupted by:

• 1) bankruptcy announcement 7 ,
• 2) Application of the enforcement measure 8 .

The interruption of the limitation period means that no account shall be taken of the time elapsed from the beginning of the limitation period until the event in question. And then the statute of limitations begins to run again 9 .

In the first the case indicated after the limitation period has been interrupted, it shall run again from the day following the date on which the decision to terminate is finalised, or discontinuance of proceedings bankruptcy.

If, on the other hand, the declaration of bankruptcy has taken place before the limitation period begins, it shall begin on the day following the date on which the order to terminate or discontinuance of proceedings bankruptcy.

In the second the situation of the limitation period shall begin again from the day following the date on which the enforcement measure was applied.

Discontinuation of the statute of limitations by means of enforcement raises many doubts. In this case, it should be borne in mind that it only occurs when the taxable person has been notified of the enforcement measure applied. Therefore, only effective service to the taxable person of the notification or protocol in question under Article 67(1) Act on 17 June 1966 on enforcement proceedings in the administration 10 , has the effect in question.

Furthermore, the measure must be actually applied by the enforcement authority. This means that there will be no interruption of the statute of limitations when the taxpayer does not have any assets to which enforcement could be directed, or when Ö despite possession of assets Õ there are obstacles to the enforcement measure (although initiating enforcement).

Provision Article 70(4) o.p. provides that the limitation period may, in principle, be interrupted several times, whenever a specific enforcement measure has been applied (subject to a notification to the taxpayer of the enforcement measure — i.e.

execution of money, remuneration for work, seizure of bank accounts, seizure of movable property). Such regulation may in practice result in no limitation of tax obligations. However, the Constitutional Court did not recognise the complaint Article 70(4) o.p. for contrary to the Constitution of Poland 11 .

4. Designed changes to the new Tax Ordinance 12

Issues related to the limitation of tax obligations have always aroused a lot of emotion – in particular the way the limitation period is calculated and the impact of certain events on its interruption and suspension. Regulation of limitation in the proposed new Tax Ordinance. There are many negative opinions and comments.

The proposed solutions clearly distinguish between the limitation of the term of time from the limitation of collection. In the first where the service of a dimensional decision of a tax authority has no legal effect after expiry 3 years.

However, this deadline is extended to 5 years in the case of decisions issued, inter alia, in: VAT, excise duty, corporate income tax and individuals.

The time limits indicated shall begin to run from the date on which:

• 1) the time limit for payment of the tax resulting from tax law has expired,
• 2) a tax obligation arises where a tax liability arises by the service of a decision setting the amount of the tax liability.

In this respect, some derogations are provided for, for example:

1. a decision determining the correct amount of the tax refund or excess of the input tax due, from the date on which the deadline for payment of the tax resulting from the provisions of tax law for the period for which the tax refund or excess of the input tax due for deduction in subsequent settlement periods within the meaning of the Law of 11 March 2004 on tax on goods and services 13 ;
2. the decision determining the amount of the loss, from the date on which the date of payment of the tax resulting from the provisions of tax law relating to the period during which the loss occurred;
3. the decision determining the arrears, from the date on which an undue refund or crediting of the amount to be recovered was made, treated as a tax arrears.

In case of correction by the obliged declaration during the period 6 months before the expiry of the time limits referred to above, to which it relates:

• 1) reduction of the amount of tax,
• 2) showing or increasing the amount of tax refund or surplus tax chargeable for deduction in subsequent periods of taxation within the meaning of the VAT rules,
• 3) demonstration or increase of loss – these dates are extended by one year.

The provision which raises particular doubts is the proposed Article 176(1) new Tax Ordinance, according to which suspension of the limitation period may take place on several occasions, except that the total period of suspension of that period may not exceed 5 years.

In the event of the expiry of that period, the limitation period shall run beyond the next day. It follows that events resulting in the suspension of the period may extend the period up to 5 years, and after the reason for the suspension has ceased, the period shall continue.

Suspension of the time limit will be possible both at the limitation period of the right to issue a decision and at the limitation period of collection. In practice, a situation cannot be excluded if, before the expiry of 5-the limitation period of the year will be the event leading to the suspension of the period, in total, e.g.

3 years, and consequently the procedure for issuing and delivering the decision will continue 8 years.

second the type of limitation is the limitation of collection according to which the tax liability expires at the expiry of the 5 years from the date on which the limitation period expired.

It is clear from the summary of this provision that the limitation in both cases will be calculated from the specific days indicated (in the course of the year) and not, as at present, from the end of the year in which the tax obligation arose or the payment deadline expired.

Similarly, in those proposed amendments, the suspension of the limitation period may take place on several occasions, except that the total period of suspension may not exceed that period. 5 years. In the event of the expiry of this period, the limitation period shall run beyond the next day.

In summary, the time limits for making an assessment, then for tax collection and taking into account periods of suspension of limitation periods, may happen that the limitation period will be several years.

It should also be added that the proposed provisions provide that if the case is resolved In the second after the expiry of the limitation period, the appeal authority, despite the existence of grounds for repealing the decision in a particular case and the referral of the case for reconsideration (the cassation decision), will not be able to do so.

He will be required to conduct the necessary supplementary proceedings on his own to the extent necessary to consider the case and to decide, thereby violating the principle of duality.

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1 i.e. Journal of Laws of 2019, item 900.

2 Article 68(1) o.p.

3 Article 68(1) o.p.

4 Article 21(1)(2) o.p.

5 Article 68(5) o.p.

6 Cf. NSA judgment of 5 July 2001, reference no. I SA/Łed 750/99, Legalis.

7 Article 70(3) o.p.

8 Article 70(4) o.p.

9 Cf. judgment of the Constitutional Tribunal of 21 June 2011, reference no. P 26/10, Legalis.

10 i.e. Journal of Laws of 2019, item 1438.

11 Cf. judgment of the Constitutional Tribunal of 21 June 2011, op. cit.

12 New project Tax Ordinance (printing No 3517) Involved in the Sejm 4 June 2019, first reading held 3 July 2019; content of the project: http://orka sejm.gov.pl/Prints8ka.nsf/0/B670900845B482D9C12584170033BE62/%24File/3517.pdf.

13 i.e. Journal of Laws of 2018, item 2174.