Relief from the payment of tax liabilities during the pandemic COVID-19

For more than a year the Polish and global economy has been functioning in a completely new reality. Pandemic COVID-19 brought with it unexpected but very significant changes in business and in its way of functioning. The global economy is experiencing major restructuring at a given moment.

With the need to seek new business strategies, entrepreneurs must face a breach of the financial liquidity of their venture. Of course, the negative effects of the pandemic vary according to industry, but the trend among entrepreneurs is negative financial results.

The purpose of this Article is to analyse the regulations, current ones and those implemented in the course of the epidemic, which will serve to illustrate the State's participation, in particular the tax authorities, in bearing the burden of the consequences of the so-called "coronavirus" epidemic.

In addition to numerous government programmes, the so-called “anti-crisis shield” and subsidies from the budget funds of entrepreneurs can also reach for other tools which, in uncertain times, would help them maintain financial liquidity or partially finance corporate restructuring, support in adapting to the conditions of the new functioning of the business environment. one with such tools are relief in the payment of tax liabilities.

Reliefs are presented in Tax Ordinance as a possibility of instalments of tax liabilities, postponement of payment of due tax or remission of tax arrears with interest.

According to information provided by deputy head of Anna Chalupa's National Tax Administration, the head of the tax offices has already spent more than 135,599 settlements on the granting of tax relief (as of 17 March 2021), of which 76,200 positive decisions to grant reductions for the total amount ok. 6,800,000,000 PLN.

The head of the tax authorities deferred the deadline for paying tax and paying tax arrears ok. 3,800,000,000 PLN, They've put the payment in payment. ok. 3,000,000,000 PLN tax and tax arrears, they've also paid off ok. 4,000,000 PLN tax arrears.

Despite the very large number of people interested in the possibility of distributing the tax liability into instalments, conclusions justified by the difficult financial situation caused by the pandemic COVID-19 have priority of consideration.

Tax relief in Tax Ordinance

According to Article 67a Tax Ordinance

(Journal of Laws of 2021, item 72):

The tax authority may, at the request of the taxable person, in cases justified by the serious interest of the taxable person or by the public interest:

1. Deferment the payment of the tax or spread the payment of the tax into instalments; 2. Deferment or instalment the payment of the tax arrears together with interest on late payment or interest on unpaid advance payments; 3. Decommend in full or in part tax arrears, interest on late payment or on the extension fee.1

What is very important, the write-off of arrears and tax also results in the write-off of interest on late payments in full or in the part in which tax arrears have been decommitted.

The tax incentives cited do not arise and are not implemented by law itself. For the purposes of their application and consequently for the use by the taxpayer, the payer of the collector, the heirs of the taxpayer or the payer and the person third responsible for the tax liability in question under Article 67a(1) i under Article 67c It is necessary to conduct a tax procedure and issue a tax decision within the meaning of Article 207 o.p.2

The tax procedure for granting the tax credit is general, distinguishing it only from the subject matter of a specific concession in the settlement of the tax liability due to the party by means of a tax decision.

The only characteristics are: the admissibility of initiating proceedings only at the request of the party[3] and where the party’s request is taken into account in its entirety by granting a tax credit, the authority may not depart from the reasons for the decision taken.

In addition, it is legally not justified to grant relief in respect of the payment of tax liabilities to give individual and general interpretations in respect of the application of tax law.

The burden of proof, which lies to a greater extent on the party than on the tax authority, is important in the course of the proceedings, as the burden of proof directs the attention of the participant to what facts and evidence are necessary to indicate that a claim for relief is to be made.

In turn, the tax authority is required to command the case, namely to carry out activities to assess the evidence submitted and to seek new evidence which may significantly affect the diffusion of the case.

The obligation of command therefore extends to any procedural action relating to the carrying out of evidence and covers any evidence to clarify the circumstances relevant to the case, whether or not the participant concerned has raised the case and to whom benefit the case is based[4].

In the procedure for the relief of tax liabilities, the party shall provide the relevant and necessary evidence and the authority shall carry out evidence by assessing and selecting the evidence on the basis of which the party requests to grant the relief.

Of course, the party may seek and introduce new evidence as well as, at the request of the party or of its own motion, the investigating authority, but the assessment of the evidence with the effect of resolving the case is on the part of the authority.

This is due to the competent procedural powers of the body which the requesting party does not have.

The Chief Administrative Court has spoken about the procedural obligations of administrative authorities.

„The fact that the proceedings for remission of tax arrears are conducted solely on the basis of evidence provided by the party does not exempt the tax authorities from conducting the investigation. The tax authority cannot confine itself to examining the arguments raised by the taxpayer in the application. The Authority is required to determine all relevant facts, including the grounds for applying tax relief. Participation in the case of a professional representative does not mean the power to transfer the burden of conducting proceedings to the party’[5].

„In applying for a tax credit, it is important not only to examine its material and family situation from the point of view of the constitutional principle of universality and equality of taxation, but also of other values arising from the basic law, such as guaranteeing employment or social security, and to determine whether there is a real risk of the existence of a taxpayer and her minors, which would require the mobilisation of social aid-related budget expenditure."[6].

„The taxpayer applying for a write-off of tax arrears must present their property situations and document both the income generated and the expenditure incurred. However, the absence of evidence of expenditure submitted by the taxpayer does not exempt the tax authority from the obligation to apply the rules governing tax proceedings. In such a situation, the tax authority must assess whether the amounts indicated by the taxpayer in the statement deserve to be taken into account or not and for what reasons’[7].

In general, it can be concluded that the burden of proof lies largely with the party to the proceedings seeking relief from the tax liability. This is supported by the fact that the party has greater knowledge of the facts which justify its conclusion. It must not be forgotten, of course, that the tax authority has no legal interest in granting relief in the settlement of tax claims.

Reasons for an important interest of the taxpayer or of the public interest

Without establishing the facts, it is not possible to assess whether there is an important interest in the case of a taxable person or a public interest which is an indication that the tax authority is entitled to grant relief in the payment of tax liabilities.[8].

When determining the conditions for applying these reductions, the legislator used under Article 67a(1) o.p. phrases not defined as ‘important interest of the taxpayer’ or ‘public interest’, which can be considered as a specific general clause referring to non-legal assessments.

It should be assumed that this clause lays down directives for the selection of a tax authority, which requires an assessment of the effects of legal decisions in terms of respect for the values which may lie within the notion of the public interest or the essential interest of the taxpayer.[9].

The correct assessment of evidence is extremely important, as the legislator does not prejudge the facts which may reasonably justify the taxpayer's request to be relieved of the tax liability.

In the light of this conclusion, it is completely unjustified to assess in the case law of the tax authorities that only certain events, such as random events, or otherwise entirely independent of the taxpayer, constitute a sufficient basis for a positive application Article 67a(1) o.p.10 .

Due to the fact that the legislator included in the provision Article 67a(1) o.p.

the record that the authority may grant relief in the payment of tax obligations at the request of the taxable person, a sound assessment of all the evidence is of paramount importance, since the body is not bound by the obligation to issue a positive one to the taxpayer.

The content of the decision is entirely dependent on the tax authority and this in turn takes it on the basis of evidence.

The facts proven in the tax proceedings are those for which, apart from subjective certainty, and thus the tax authority's belief in the veracity of the findings, there is also information in the light of which there is an objective, therefore verifiable, assessment of the appropriateness of the tax authority’s observations and conclusions[11].

However, some regulations should be cited here. Tax Ordinance, which is bound by the tax authority when assessing the evidence:

According to Article 191 d.p.:

„The tax authority shall assess on the basis of all the evidence collected whether the case has been proven.’12

and Article 192 d.p.:

„The facts may be considered to be proven if the party has been given the opportunity to comment on the evidence carried out.’13

To prove the facts that would be sufficient to recognise a request for relief in the payment of tax obligations, i.e. the fulfilment of an essential condition of the taxpayer's interest or of the public interest, allows for a positive subsumation and a decision to be taken as requested by the party.

The case law also speaks of the importance of assessing evidence. ‘Because of the constructions Article 67a(1o).p., the phrases ‘important interests of the taxpayer’ and ‘public interests’ refer to the hypothesis of the standard and indicate the actual situation in which tax arrears or interest on late payment can be paid.

The tax authority has a certain degree of freedom both with regard to the interpretation of these concepts and with regard to the assessment of the facts.

This freedom to interpret rough concepts, which are undoubtedly both grounds for waiving tax arrears and assessing the reality of the existence one of them, cannot be identified with the use of the so-called administrative recognition by the authority.

With the recognition itself, and therefore with the use of this legal standard, we will only have to deal with it if the tax authority finds that there is one of these conditions or both together’[14].

In practice, the Authority very often assesses factual circumstances such as whether a tax default is the result of a faulty behaviour of the taxpayer and whether the granting of a relief in the payment of a tax liability in this case will actually contribute to its payment.

How to Get Relief from Tax Charges in Pandemic Times

In order to initiate a tax procedure for granting relief in the payment of tax liabilities, a request should be made to the competent Chief of the tax office. Tax payers (not just entrepreneurs) based on Article 67 Tax Ordinance may request: distribution into instalments of tax receivables (RAT-Z application), remission of tax arrears (UZ-M application), postponement of payment of tax dues (TER-Z application).

The grounds for the request must state the facts which, after an objective examination of the tax authorities, have indicated an important interest in the taxpayer or a public interest.

In addition, the application should be accompanied by annexes containing additional information to help the body assess the facts and take the appropriate decisions.

Such supporting documents will, for example, include a statement of the taxpayer's property situation, a statement of the property held or an information form when applying for de minimis aid.

It is worth pointing out that the case-law is directed towards taxpayers: “Relieves are an exceptional instrument, but failure to apply them should not lead to undesirable effects from the perspective of the public and the taxpayer and its relatives. In particular, the principles of social justice, ethics, trust in state bodies should be taken into account"[15].

Where the application concerns the settlement of the tax arrears, the number of instalments, the amount of instalments and the date on which the taxpayer pays the individual payments must be indicated in particular. If a positive decision is reached, the amounts declared and the instalments must be maintained, as the one-time delay in payment invalidates the decisions on the distribution of the instalment as a consequence, the amount is payable in full and with interest.

During the epidemic Covid-19, In line with the recommendations of the Ministry of Finance, the offices are to treat taxpayers in a more "graceful" manner when they demonstrate the important interest of the taxpayer and of the public interest.

The Ombudsman of Small and Medium-sized Entrepreneurs called on the Minister of Finance, Funds and Regional Policy to ask the local tax authorities for a favourable approach to applications for tax relief by micro-entrepreneurs, small and medium-sized entrepreneurs, consisting in instalments and write off outstanding liabilities in property tax.

According to the Ombudsman, the relief of outstanding public liabilities should be granted to entrepreneurs as far as possible, without unnecessary formalities and excessive rigour. According to the Ministry of Finance, “aid to taxpayers is a priority for the National Tax Administration.

Tax offices place great emphasis on the issue of tax relief decisions as soon as possible, without undue delay and without extensive evidence. In the case of relief cases, the tax authorities shall each time examine the applicant's situation in terms of the existence of a public interest as well as the important interest of the taxpayer.

In response, the Minister of Finance informed the Ombudsman that he had sent a letter to the Presidents of the Regional Chambers of Auditors regarding the application of tax relief by local authorities to entrepreneurs in financial difficulties due to the pandemic.

In this letter, the Minister of Finance provided the Presidents of the Regional Chambers with updated information on available instruments of property tax support and fair fee.

He indicated that the amendment dated 9 December 2020 Act on Special Solutions for Prevention, Prevention and Combating COVID-19, Whereas other infectious diseases and the resulting crisis situations were extended the possibility for municipalities to apply property tax preferences consisting in the possibility of introducing exemptions and of extending the deadlines for payment of the property tax instalments.

At the same time, the collection of the fair fee was suspended In 2021 In pre-emergency proceedings, a prolongation fee was charged in the case of a decision to postpone payments or to extend the payment to instalments.

Accepted Article 15 zzzh Act dated 31 March 2020 amending the Act on Special Solutions for Prevention, Prevention and Control COVID-19, other infectious diseases and the resulting crisis situations and certain other laws are not counted as a carry-over charge on the basis of an application made during the period of emergency or epidemic or during the period 30 the days following their cancellation.

Entrepreneurs who have tax arrears or already know that repayment of the tax liability will be too burdensome for the continuation of the project may benefit from State aid, which is specified in the programme ‘Polish crisis measures — COVID-19” – scheme for tax relief on the basis of Tax Ordinance. When applying to the competent tax office, they may seek:

• • postponement of the time limit for payment of the tax or distribution of payment of the tax per instalment;
• • Deferment or instalments of tax arrears and interest on late payment

Such support may be granted to a trader whose economic turnover has fallen due to COVID-19 with at least 25% in any month after 31 January 2020, compared to the previous or similar month of the previous year. The possibility of applying a reduction (derogation of the payment deadline or distribution of the tax arrears per instalment) concerns a tax whose payment deadline expires after 31 December 2019, and tax arrears arising after 31 December 2019

The trader, when submitting a request for relief to the competent tax authority, as well as information confirming the decrease in turnover, should include a simplified form of information to be provided when applying for public aid related to prevention, prevention and eradication. COVID-19 and its effects.

Aid for repayment of tax obligations must be granted before 31 December 2021, and the postponement or repayment of the last instalment may not be later than 31 December 2022 Of course, these dates may change due to the further development of the country’s epidemic.

Summary

The postponement of the payment deadline or its distribution into instalments is an instrument available to taxpayers in specific situations and can be an effective tool to improve the financial liquidity of businesses.

In an era of epidemic Covid-19 a tax relief application can guarantee the existence of an economic activity, win time, for example, to launch processes aimed at changing industry or specific business.

It is worth that the taxpayer examines his situation, properly collects the documents so that the tax relief procedure is concluded for him, and was not extended in time while waiting by the tax authority to supplement the formal deficiencies in the case, for example, of applications or property statements.

The guidelines of the Ministry of Finance aim to mitigate the eligibility conditions for the grant of a concession that can save the business and provide the entrepreneur with liquidity.

Unfortunately, however, the number of applications to grant relief in the payment of tax liabilities increases overnight and consequently prolongs the waiting time for a decision to be taken on which, in certain situations, the company may continue to exist.

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