Extended tax liability – liability of persons third

There is a belief that the tax obligation, and therefore the tax obligation, is rather linked to a specific entity, regardless of whether it is a natural or legal person. However, the practice and tax rules indicate that such a legal tax relationship may also be ‘extended’ to entities other than the original obliged entity.

However, unlike the legal implications, in the case of liability of persons third a modification of the tax law relationship may arise only through a constitutional decision of the tax authority.

The author, presenting the position of doctrine and jurisprudence, examines the issue of expanding tax liability, with particular emphasis on the responsibility of individuals third.

1. Introduction

In the first parts Article 1 the tax obligation has been defined and the way it is transformed into a tax liability and the differences between those concepts. The main objective of the cycle is to focus on situations where it is not the entity of the original tax relationship that will ultimately meet the tax obligation.

This means extending the tax obligation in the form of legal consequences and the tax liability of persons third. Parts first The study described the phenomenon of legal consequences of natural persons and legal persons with regard to liability for tax obligations linked to the acquisition of rights and obligations by the successor.

This applies to both legal entities, organisational units without legal personality and individuals. In addition, questions related to the consequence of a single-member capital company resulting from the transformation of an entrepreneur who is a natural person and an enterprise into a inheritance were raised.

The purpose of this Article is to discuss general principles of tax liability for persons third and identify the differences between this form of extension of the tax liability and the legal consequence.

Although both institutions may ultimately make the entity responsible for paying the tax liability different from the original tax relationship, this extension takes place in a completely different way. This approach to the extended tax obligation will allow for a deeper analysis of the issue.

2. Tax liability of persons third and tax liability

Tax provisions relating to the tax liability of persons third are included in Section III, Chapter 15 Act on 29 August 1997 - Tax Ordinance (Next: Tax Ordinance or o.p.)[2].

This institution shall be used in situations where a taxpayer is absent or the taxpayer fails to perform or is unable to execute the tax liability imposed on him and the enforcement of his assets is ineffective.

This is a fundamental condition for this institution to function in a fair state of law, otherwise it would give rise to a large area of abuse and the obligations would be met by those who are able to do so instead of those responsible.

Liability of persons third may be justified by existing or past family, organisational and exceptional civil law ties.

The tax liability thus shaped has been included in a specific way in the provisions of the O.P. First of all, it has a solidarity, which is clear from Article 107 o.p. 3 , a for its use, according to Article 91 o.p., the provisions of the Act on 23 April 1964 - Civil Code 4 (Next: k.c.). This is about passive solidarity, that is, tax debtors.

Namely: “The essence of passive solidarity is that each debtor is obliged to fulfill the entire benefit to the creditor, as if he were the sole debtor. The creditor may, according to his choice, require all or part of the benefit to be fulfilled from all debtors together, from several or from each individual.

However, the creditor is obliged to accept a benefit from any of the debtors even if he has requested the performance of another debtor’ 5 . This means that once a person has fulfilled his obligation third it has the right to regress, i.e.

reimbursement of a certain amount to the original debtor, in this case the most common taxpayer or payer[6].

Such liability is also of an accession and a successor nature, as it cannot arise without prior tax liability. This also means that the person third there is no possibility of interference with this claim or a decision taken in a specific case. Nor can such liability continue beyond the responsibility of the obliged person.

Thus indicated the Provincial Administrative Court in Gdańsk in its judgment of 8 January 2015: „If the liability of the obliged person has been subject to limitation and is no longer liable to be paid before the expiry of the period, the effects of the obligation to pay it by the person third are the same as for the principal.

So the responsibility of the person third no longer than the responsibility of the obliged person himself’ 7 .

It is worth adding that this is a food responsibility. This means that it can only be introduced when it is impossible or difficult to obtain a tax debt from the original taxpayer. Persons third they are liable for such debt with all their assets, indicating the personal nature of the institution. Article 107(2) defines the responsibilities of persons third. In addition to tax arrears, this responsibility also includes:

• • taxes not collected and collected and not paid by payers or collectors;
• • interest on late tax arrears;
• • not repaid within the time limit of the advance of the input tax on goods and services and the interest rate on those advances;
• • costs of enforcement proceedings
• • – unless otherwise provided.

Liability of persons third is created solely by a constitutional decision of the tax authority which decides by decision. In addition, provisions Tax Ordinance contain a closed directory of entities to which such a decision may be made 8 :

• • divorced spouse;
• • the taxpayer’s family member;
• • the buyer of the undertaking or an organised part of the undertaking;
• • a single-member capital company was created by the transformation of an entrepreneur who is a natural person;
• • a company having no legal personality to which a natural person has contributed to cover its business;
• • firmant;
• • the owner, self-employed holder or perpetual user of property or property rights in a particular relationship with the user of the property or property rights;
• • lessee or the property user;
• • a partner in a civil, public, partnership partnership partnership and a subsidiary in a limited partnership or limited partnership;
• • a member of the board of a limited liability company, limited liability company in an organisation, joint stock company or joint stock company in an organisation;
• • liquidators of the company, except for liquidators established by the court;

• the legal persons acquiring or the legal persons resulting from the division, if the property acquired as a result of the division and, when distributed by the division, also the property of the divided legal person, does not constitute an organized part of the undertaking;
• the guarantor or guarantor whose security has been accepted by the tax authority;
• the taxable person in question under Article 105a Act on 11 March 2004 on tax on goods and services (hereinafter: the VAT Act) 9 ;
• a taxable person who does not comply with the obligation to pay a claim to the tax account shown for the so-called a white VAT list;
• an agent setting up the entity as an active VAT taxable person.

The competent authorities for ruling such decisions are tax authorities first the bodies in which competence lies the dimension and the collection of the benefit. According to Article 118(1) o.p.

cannot be made a decision on the tax liability of a person third, if since the end of the calendar year in which the tax arrears arose has expired 5 years, and in the case of liability for the tax on goods and services, that period shall be 3 years.

In contrast, limitation of the obligation resulting from a person's liability decision third after 3 years from the end of the calendar year in which such a decision was delivered. In addition, Article 108(2) o.p. indicates the earliest date of the decision on the liability of the person third.

For the sake of clarity of analysis, the above entities have been divided and described within specific groups combining the common characteristics of persons third.

3. Tax liability of persons third – family ties

The responsibility of family members concerns the divorced spouse and family member. It should be stressed that, for tax purposes, the taxpayer's spouse is not treated, in principle, as a person third. However, the situation with a former spouse is different.

Such a person shall be jointly and severally liable for the tax arrears incurred during the duration of the property partnership, but only up to the amount of his share of the common property.[10].

This seems a reasonable assumption, since at the time of the delay, the marriage has not yet been cancelled and for that moment the spouse was not, in principle, a person third.

It is worth noting that regulations Tax Ordinance They treat the invalid marriage as well as the separated marriage. In addition, this liability does not cover taxes not collected and collected, but interest paid by payers or collectors for late payment and enforcement costs arising after the date of finalisation of the divorce ruling.

In the case of a family member, liability relates to tax arrears arising from the conduct of business activity and arising during the period during which continuous cooperation in the performance between the taxpayer and the family member took place, and this has benefited from this[11].

According to the Court of First Instance, ‘The tax payer’s family members are considered to be descending, preliminary, siblings, conjugal spouses, a person who is in an adoption relationship and who remains with the taxpayer in actual life’ 12 . This also applies to spouses who have established a partial or total property separation.

However, the responsibility of a family member is limited to the amount of the benefit obtained 13 and shall not apply to uncollected and collected and not paid by payers or tax collectors except for claims collected from such a family member.

In addition, such liability shall not apply to persons to whom the taxpayer had a maintenance obligation to an appropriate extent.

4. Tax liability of persons third – Civil bond

This group includes the entities responsible for the acquisition of the company or its organised part; a non-legal entity to which the company has been transferred to cover the shares; the owner of the property used to conduct the business; lessee or the owner of the property; partner of the company 14 ; the guarantor and guarantor.

Purchaser of an undertaking or an organised part of an undertaking 15 is jointly and severally liable to the taxpayer for any tax arrears arising up to the date of acquisition relating to the economic activity, unless, with due diligence, he could not have known of those arrears.

This is an element of frequent disputes between taxpayers and tax authorities. The transfer of responsibility takes place whether it has been acquired in a paid manner or not.

Tax arrears and other claims for which the purchaser is responsible must be related to the economic activity carried out by the seller, including tax on goods and services, excise duties, income tax or part of social security contributions paid by the employer.

In this case, liability is limited to the value of the company acquired. However, it should be stressed that there is a real value and not a nominal value here, so if the authority has certain doubts as to the amount of the value shown, it should take steps to verify it.

An important form of collateral and protection of the rights of the buyer is to obtain a certificate of tax arrears of the seller, according to Article 306g The purchaser will not be responsible for the arrears not shown in such certificate[16].

They shall be issued at the buyer's request with the consent of the taxable person expressed in writing, with his signature officially or notarially certified, or in the form of an electronic document, and shall only provide protection against tax arrears.

In addition, the buyer is devoid of the risk of such liability if the acquisition took place in enforcement or bankruptcy proceedings.

According to the Court of First Instance, ‘a company not having legal personality to which a natural person has contributed to the participation of its company shall be jointly and severally liable to its entire assets with that natural person for the tax arrears incurred by the company’s transfer date’ 17 .

Such a company is the successor of a natural person's legal entity in the field of rights, except for those which cannot continue under the rules governing the taxation of companies without legal personality.

On the other hand, in terms of responsibilities the company has the status of a person third, which is jointly and severally liable to a natural person by the date of the company's tax arrears. This responds to the Administrative Court's doubts about liability.

By Tax Ordinance: „Owner, self-employed holder or perpetual user of property or property rights remaining with the user of the property or property rights in relation to that property Under section 2, be liable for the user's tax arrears arising from the user's business activity, if the item or the law in question is related to or intended to carry out economic activities’ 18 .

This provision indicates three groups of entities that may be subject to liability are: owners, spontaneous holders and land-users[19]. The condition for liability is, first and foremost, the existence of a link between the user and the identified persons within the meaning of income tax legislation.[20].

In addition, the user must carry on an economic activity using the thing or property right delegated to him. Rafał Dowgier points out that ‘Ratio legis of regulation under Article 114 o.p. is to counter and reduce tax evasion practices using these links" 21 .

In this case, liability is limited to the equivalent of the goods or property rights in use. As in the case of a company, this refers to real values which, in the event of doubt, should be assessed during the proceedings of the tax authority. In this case, it appears reasonable to use evidence from the expert’s opinion.

This liability also extends to leases, leases, leases and other similar contracts.

In case of lessee or the property user is jointly and severally liable to the owner, perpetual user or beneficial owner of the property for the tax liability arising from the taxation of the property arising during the lease or use[22]. This therefore clearly indicates that there are no grounds to hold the property owner responsible[23].

This provision is consistent with the liability provision on things. Liability is also limited exclusively to tax arrears of the taxpayer and must be linked to the taxation of real estate created during lease or use.

In Poland, property management may need to be regulated one of three benefits: property tax, agricultural tax or forest tax.

Tax Ordinance states that ‘A partnership of a civil, public, partnership and a subsidiary of a limited partnership or limited partnership shall be jointly and severally liable to the company’s entire assets and to other shareholders for the company’s tax arrears’ 24 .

It is also apparent from the case law of the administrative courts that, in addition to the liability of the partner, the extent of the possible fault in the formation of the backlog is irrelevant 25 or the degree of involvement of individual shareholders in the company’s activities[26].

This responsibility also applies to a former partner in relation to backlogs arising when he was a partner.

In addition, as regards the liability of the shareholders of the company, proceedings may be initiated even if the company has not been found to be ineffective.

Moreover, in the case of shareholders of companies, the decision on their liability does not require prior issue of the decisions in question to the company under Article 108(2)(2) o.p. In one proceedings can be determined both the tax liability of the company and the person third having tax liability.

This also applies to cases where the company was dissolved before the decision was taken.

Tax Ordinance points out that ‘The guarantor or guarantor whose security has been accepted by the tax authority shall correspond to all of his or her assets, jointly and severally with the taxpayer, payer, collector, their legal successor or person third, for an obligation resulting from a decision which is the subject of a security, including interest on delay, and the costs of enforcement resulting from the execution of that decision, up to the amount of the guarantee or guarantee and within the time limit indicated in the guarantee or guarantee.’ 27 .

This provision shall apply to a guarantor or guarantor whose security has been accepted by the tax authority in connection with the refund of VAT.

5. Liability of persons third – organisational ties

The analysis below concerns the tax liability of the person third in the case of liability of a company without legal personality, a single-member capital company, liquidators and, above all, board members and other legal persons.

An interesting case is the responsibility of a single-member capital company created by the transformation of an entrepreneur who is a natural person.

This situation has already been addressed In the first part of the study as a legal consequence, but the legislator decided to distinguish it also in the section concerning persons third, which gives rise to interesting implications.

This kind of responsibility is defined in the doctrine: “Currently, therefore, we are dealing with a situation where on the basis of Article 93a(4) o.p. the new company enters into the law of the tax law of the transformed entrepreneur, but in the field of responsibilities it corresponds to the rules applicable to persons third.

As a result, its liability is solidarity with the former entrepreneur, subsidiary and accessionary and is based on a decision of the tax authority on the liability of the person third.

Therefore, the tax authority First, should take responsibility from a natural person who is no longer an entrepreneur and by virtue of Article 5842(3) Act on 15 September 2000 Commercial Companies Code 28 (The author's note) becomes a shareholder or shareholder of a converted company on the date of conversion.

Once the company has been entered in the register, the registration authority shall, of its own motion, remove the entrepreneur converted from Central Register and Information on Business Activity. This means that a natural person loses only the status of an entrepreneur and not a tax liability entity, including a tax obligation.

It's for this individual. First, enforcement of tax arrears related to the period of his business activity should be directed" 29 .

A similar situation exists in the case of tax liability of a company without legal personality, i.e. personal personality, in the case of a transfer by a natural person to cover the participation of an undertaking, as well as in the acquisition of legal persons or the formation of legal persons as a result of a division.

Such a company is a legal successor according to Article 93a(5) O.P., whereas in the field of responsibilities it has the status of a person third, and the acquirers or those resulting from the division shall only correspond to the value of the acquirer or the division.

Tax Ordinance states that liquidators are also jointly and severally liable for the company's tax arrears arising during the liquidation[30]. In their case, however, this applies only to liquidators established by themselves, i.e. not established by the court. The case law indicates that it is not only covered by liquidators of capital companies but also by other entities, including former liquidators[31].

Without doubt, the most important institution is the responsibility of the members of the board of directors, and it is both legal persons identified under Article 116 o.p., also in the case of companies in the organization as well as others.

From legislation Tax Ordinance it follows that a member of the board of directors is jointly and severally liable if the execution of all or part of the assets has proved to be ineffective and the default occurred at the time when he was a member of the board of directors[32].

The Authority should also assess whether there have been negative grounds for deciding on liability in the case.

first such a condition is that an application for bankruptcy or the opening of a restructuring procedure or approval of the arrangement in the procedure for approval of the arrangement is effectively submitted 33 or proving that it didn't happen without the guilt of a board member.

second the condition is that a member of the board of directors indicate the assets of the company from which the tax arrears could be met to a large extent[34].

The tax rules do not define precisely the term “in a substantial part”, but according to the NSA judgments it is indicated that this means a situation in which it can be predicted with a great deal of certainty that enforcement will prove effective and the amount of property enforced will be a high percentage compared to the amount of arrears.

The case law indicates that the burden of proof is reversed as regards the responsibility of the board members. The tax authority is only obliged to demonstrate positive conditions and a member of the board of directors is obliged to indicate the circumstances which relieve responsibility.

It should also be stressed that, according to NSA rulings, the responsibility of a member of the board of directors of a commercial law must be assessed on an increased basis, taking into account the increased economic risk associated with the conduct of that activity.[35].

In the NSA judgment of 29 June 2011 it is stated that: ‘Provision Article 116(1) Tax Ordinance imposes an obligation on the tax authority to conduct proceedings concerning liability for tax arrears of the company with respect to all persons liable for such liability’ 36 .

This means that the tax authority cannot freely elect a board member to bear the responsibility for the company's tax arrears. On the other hand, the members of the Management Board have full rights of recourse to the other members of the Management Board for their own tax arrears.

In the NSA judgment of 29 June 2011 stated that: ‘Because the decision has the responsibility of a person third the constitutional meaning, if the authority conducts separate proceedings against each of the persons listed under Article 116 In order to ensure the effectiveness of claims against joint and several debtors, it is necessary to settle the liability of each of these persons (power one a decision or a number of decisions, in accordance with the circumstances of the case), also where the tax arrears in the course of the transfer of liability procedure have expired as a result of its forced enforcement of the assets one of joint debtors’ 37 .

1. Liability of persons third – company and special liability in the field of tax on goods and services

Company is a tax credit specified under Article 56 Act on 10 September 1999 Tax Penal Code 38 (Next: k.k.s.). This means that it is subject not only to tax sanctions but also to criminal sanctions.

This procedure involves the existence of a taxable person (firmed) and an entity third (a firm) who gives consent to act under his name or name or company in order to conceal or reduce the actual economic activity of the taxpayer.

Therefore, the very essence of this is the cooperation of the company with the taxpayer, despite the lack of direct participation. If there is a tax reduction in this respect, there is no criminal liability for the entity third[39]. However, Article 113 o.p.

is jointly and severally liable to the taxpayer for the tax arrears incurred in this case. There is also no limit to this responsibility, so it does not matter, for example, what the company has actually benefited from making its name or company available.

For special liability in the case of a tax on goods and services, the two types of responsibility. After first, This is a liability Article 105a the VAT Act, However, only to that part of the backlog which corresponds to the tax due on supplies made to that buyer, and does not cover taxes not collected and collected, but not paid by payers or collectors, not reimbursed within the time limit of advance payments of input tax on goods and services and interest on those advances, the costs of enforcement proceedings and interest on late payment arising before the date of the decision on that liability.

second type is introduced with the beginning 2020 the institution of responsibility in accordance with the rules applicable to persons third, taxable person for goods and services for whom the supply of goods or services has been made[40].

This refers to cases where payment of invoiced fees has been made for an account other than those indicated on the so-called white list of VAT taxable persons. This liability is also limited to that part of the backlog which corresponds to the tax due on the supply or provision of services.

The joint liability shall also be borne by the agent who has registered the entity as an active VAT taxable person, but only in respect of arrears arising from activities carried out in the course of 6 months after such registration[41].

7. Summary

The analysis of the issues discussed in both parts of the study shows that tax rules not only allow the rights and obligations of the entity to be taken over but also extend its obligations and backlog to other entities.

Normally, they are even partly related to the rise of arrears, but also to the taxpayer with strong family-capital ties. In this way, the legislator counters various forms of tax erosion, mainly by concealing or transferring assets and showing a lack of components from which the enforcement of dependence could be achieved.

Only by considering in its entirety both forms of modification of the corporate tax relationship can the scope of the corporate tax liability, which, as shown in both articles, often go beyond the directly shaped form.

_________________________________________