Relief in the payment of tax liabilities – regardless of the ‘dishes’

The current epidemiological situation may make it difficult for many taxpayers (casents, payers) to regulate all tax obligations in time. It is therefore worth looking at the regulations which, regardless of the new arrangements currently being developed in an accelerated manner, are in place in tax legislation and can help minimise or completely eliminate the financial consequences of non-regulation or late payment.

This is the tax relief indicated in Chapter 7a Act dated 29 August 1997 Tax Ordinance (Next: Tax Ordinance). The Ministry shall ensure that applications for reductions are considered First, [1] .

Reasons for relief of commitments

The basic conditions for the relief of tax liabilities are:

(a) the taxable person submits an appropriate application; and

(b) to demonstrate the legitimate interest of the taxable person or of the public interest.

It should be stressed that the conditions indicated must occur simultaneously.

In Chapter 7a Tax Ordinance The legislator has not indicated the elements and form of the proposal, therefore it appears reasonable to refer to the general principles relating to applications in tax proceedings resulting from Article 168 Tax Ordinance, i.e.

This application should include, inter alia, the content of the request, the indication of the person from whom it comes, the address, the tax identifier. It is crucial that the taxpayer exhaustive set out the circumstances which he considers justify his important interest or public interest.

A valid, legitimate interest of the taxpayer is understood by the situation in which, due to exceptional random cases, the unfortunate interplay of circumstances, the taxpayer is unable to settle the tax arrears

A valid legitimate interest of the taxpayer is understood by the situation in which, due to exceptional random cases, an unfortunate interplay of circumstances, the taxpayer is unable to settle the tax arrears [2] . WSA in Gliwice indicates that this could be, among other things, loss of income or loss of chance assets [3] .

It should be noted that, in recent times, the case-law has also expressed the view that "the concept of the taxpayer's important interest cannot be limited to exceptional situations or to events preventing tax arrears from being settled, since this concept functions in a much broader sense, taking into account not only emergency situations, but also the normal economic situation of the taxpayer, the amount of income and expenditure obtained by the taxpayer, and in this regard also expenses incurred in connection with the protection of the own health or of members of the immediate family (e.g.

treatment costs).

In that judgment, the CSA pointed out that ‘it is indisputable that the retirement age and health problems are directly linked to the material situation’ and, furthermore, in order to fully consider the case, it is necessary to take into account that ‘the applicant lives alone and does not receive assistance from his spouse’.

It is therefore necessary to establish the relationship between income and expenditure necessary for the existence of the taxpayer [4] .

On the other hand, the public interest understands the situation, which makes the payment of tax arrears necessary for the taxpayer to apply State aid measures, because it will not be able to meet its material needs. [5] .

In addition, the NSA points out that the public interest should also mean a directive of conduct requiring that the common values of society be respected, such as justice, security, citizens' confidence in authorities, the efficiency of the state apparatus, the correction of erroneous decisions, etc. [6] .

It should be stressed that the institution of the relief is a tax liability of a discretion. Therefore, where it is found that any of the conditions set out in the case exists, under Article 67a(1) Tax Ordinance (the important interest of the taxpayer or of the public interest or of the two conditions together), the authority shall decide, on a discretionary basis, whether or not to grant the taxpayer a reduction in the payment of the tax liability.

Types of tax relief

Tax Ordinance under Article 67a(1) indicate the types of relief to be granted to taxable persons.

According to Article 67a(1) Tax Ordinance The following shall be included in the tax relief:

• • postponement of payment period or distribution of payment of the tax per instalment;
• • postponement or distribution into instalments of the payment of the tax arrears, including interest on late payment or interest on unpaid advance payments;
• • remission, in whole or in part, of tax arrears, interest on late payment or carry-over fee.

It should be stressed that the remission of tax arrears also results in the remission of interest on late payments in full or in the part in which the tax arrears have been decommitted.

In the case of taxable persons engaged in economic activity, the tax authority may grant tax relief in accordance with Article 67b Tax Ordinance:

• 1) which do not constitute State aid;
• 2) which constitute de minimis aid - in so far as and under the conditions laid down in the directly applicable Community legislation concerning de minimis aid;

3) which constitute public aid, inter alia:

• • to remedy damage caused by natural disasters or other exceptional occurrences,
• • provided to promote and promote culture, national heritage, science and education,
• • for training,
• • for employment.

Where relief constitutes de minimis aid

A taxable person operating an economic activity seeking relief from the tax liability, constituting de minimis aid, shall be obliged to submit, together with the application, all the de minimis aid certificates he has received in the year in which he applies for the aid and during the 2 the preceding years, or declarations of the amount of de minimis aid received during that period, as well as information relating in particular to the applicant, his economic situation, his activities and the amount and destination of the public aid received for the same eligible costs to be covered by the de minimis aid. Where the taxable person of an entrepreneur has not benefited from the aid, he is obliged to make a declaration of non-receipt.

A taxable person conducting an economic activity must show this information on a dedicated form. In addition, he is obliged to submit financial statements for the last 3 years, in so far as they are required to be drawn up, resulting from accounting rules. The absence of such certificates or declarations makes it impossible to proceed with the granting of a refund.

When relief from tax liability constitutes State aid

The granting of a relief in the payment of public aid tax obligations may only be applied where it is linked to the only of the objectives listed exhaustively in the recipe.

The taxpayer-entrepreneur requesting the aid shall submit to the tax authority, together with the request for it, information on the State aid received, including, in particular, the date on which it was granted, the legal basis, form and purpose.

This information shall also be submitted on a special form. The taxpayer shall, when applying, only indicate the amount of State aid received for the undertaking in question, irrespective of when it received the aid.

Deferral of payment deadline or distribution of tax and tax arrears per instalment

Deferral of the payment period or distribution into instalments is one from ways to facilitate the implementation of liabilities on the website, but the application of such reductions does not change the amount of the obligation.

Where a decision is taken to postpone the payment period concerning taxes constituting the revenue of the State budget, the tax authority shall fix a carry-over charge on the amount of tax or tax arrears. The rate of the extension fee shall be equal to the reduced interest rate for delay.

It should be stressed that one of the solutions envisaged by Act dated 31 March amending the Act on Special Solutions for Prevention, Prevention and Control COVID-19, Whereas other infectious diseases and the resulting crisis situations and certain other laws are excluded from the application of the provisions on the carry-over charge in the event of a request for a deferred tax or a distribution of the payment of the tax per instalment. This regulation is intended to encourage taxpayers to use this form of support.

The distribution into instalments results in a postponement of the payment deadline by dividing the amount of tax into parts and assigning each of them a corresponding payment deadline.

It should be stressed that this method can only be used if the number, amount and duration of payment of instalments takes account of the taxpayer's financial possibilities. The taxpayer applying for a relief shall be required to demonstrate the real possibility of repayment of instalments within a certain period and the amount due. [7] .

In the case-law, there is a general view that, in order to assess the taxpayer’s situation as regards the redemption of tax arrears, it is important to establish these arrears and the circumstances attached thereto.

Decommissioning in whole or in part of tax arrears, interest on late payment or carry-over fee

The remission is, on the other hand, a solution which allows for the expiry of tax obligations, thereby repealing the obligation to pay the liability on the taxpayer. The remission of tax arrears is extraordinary in that it results in a definitive picture of the taxpayer's public liability, while the principle is its universal application [8] .

In the event that the decision to waive the tax arrears is not satisfied by the creditor, which is the tax administration in this case, the State budget is therefore depleted, the authorities are obliged to examine all the circumstances of the case.

In the case-law, there is a general view that, in order to assess the taxpayer’s situation as regards the redemption of tax arrears, it is important to establish these arrears and the circumstances attached thereto. [9] .

Thus, for example, the attitude of the taxpayer, who had the funds and still did not regulate the tax liability, and instead incurred other expenditures, is important to assess the merits of the application for the remission of personal income tax arrears.

In this case, it is difficult to conclude that the taxpayer was found to be in financial difficulty without fault, which prevented the timely payment of the tax [10] .

The amount of the carry-over charge resulting from the decision may also be decommitted. Its redemption may take place in whole or in part. The remission of the carry-over fee shall be possible only until the expiry of the decision to postpone the payment period or to extend it to instalments. In the event of failure to comply with the deferred deadline for payment of the tax or any of the instalments, the decision to postpone or to postpone shall expire.

Provision of ex officio relief in the payment of tax liabilities

In the cases referred to above, a request from a taxable person is necessary for the application of the relief, but in certain cases the tax authority may, of its own motion, grant relief for the payment of liabilities.

According to Article 67b Tax Ordinance if:

• 1) Whereas it is reasonable to believe that no amount exceeding the execution expenditure will be obtained in enforcement proceedings;
• 2) the amount of tax arrears shall not exceed five times the cost of the reminder in the enforcement proceedings;
• 3) the amount of tax arrears is not satisfied in the completed or discontinued the proceedings the winding-up or insolvency or the court dismisses the application for bankruptcy;

1. the taxpayer has died, leaving no assets or movable property not subject to execution on the basis of separate provisions, or has left household items whose total value does not exceed the amount 5,000 PLN, and at the same time there are no heirs other than the Treasury or the local government unit and there is no possibility of a person's tax liability third.

Given the multitude of interpretations and the rulings on tax reliefs, it can be noted that tax authorities, as well as courts in many cases, may use, within their own discretion, an interpretation that narrows the meaning of ‘public interest’ or ‘interest of the taxpayer’. It is therefore necessary to present exhaustive and the duly formulated justification in which a causal link will be presented between the legitimate inability to pay tax duties and the existence of a specific situation where the taxpayer was unable to foresee.

If you have any doubts about the possibility of submitting an appropriate application, as well as the appropriate justification, please contact our team specialists Russell Bedford Poland.

Author: Anna Jeziorska, tax consultant