Extending the range of entities responsible for tax liability in the case of goods and services tax – additional liability for tax and criminal criminal offences – part 1

When analysing the efficiency of the collection of tax on goods and services over the last few years in Poland, it can be concluded that a significant number of entities obliged to discharge this tax – given the amount of VAT due to the State Treasury – no longer exists or has no financial means to satisfy tax obligations. The problem is all the more important in taking into account the fact that persons acting on behalf of and for the benefit of those taxpayers, after the liquidation or bankruptcy proceedings have been concluded, assume or manage similar – new – entities which are no longer obliged to pay a "remand" tax on goods and services.

Introduction

This article is devoted to identifying the number of persons or entities liable for material or other liability related to the resulting backlogs of other VAT taxable persons active, in particular capital companies, in the tax on goods and services. Considerations will concern First, liability of persons third for tax obligations and liability of persons third in the case of criminal and criminal liability concerning: return of property benefit, forfeiture of objects, collection of the monetary equivalent of the forfeiture of objects and so-called extended confiscation[1].

Tax law does not define liability[2]. Consequently, when examining liability in tax law, the acquis of civil law should be used. On the other hand, should be stressed that the existence of liability in this respect is based on the provisions of this kind of law; i.e. the tax law for which it is to apply[3].

Debt must be distinguished from liability[4]. The fact that a debt exists is only related to the obligation of the debtor to provide (monetary) benefit, and the existence of liability is related to the possibility of making that benefit compulsory. If there is a debt without liability, the debtor shall be able to default.

It should be assumed that liability, in particular tax liability, is the possibility (power) of the creditor (State Treasury/Local Government Unit) to pay the debtor’s debt. This right may be exercised by the use of legal instruments in order to enforce obligations due from the assets of entities or persons with liability.[5].

The scope of the liability relates, in principle, to two groups of entities 5 , i.e.: First, entities responsible for their own action or omission.

Against the background of the regulation of the Goods and Services Tax Act (hereinafter: the VAT Act)[7], In the first a group of entities would include taxable persons of that tax (entities liable to pay the excess tax due over the chargeable) or entities to whom it has been unduly paid, or at an amount other than the due refund of the tax difference or the chargeable tax refund within the meaning of the provisions on goods and services tax, as well as other forms of tax refund provided for in the tax legislation.

To second groups of entities may be credited with entities responsible for so-called other persons' debt. Such solutions are provided for both civil law and civil law.[8], and tax law[9]. Some representatives of the doctrine also indicate an intermediate category, i.e.

legal successors who are responsible for other people's obligations – the predecessor, but who are responsible for them as if it were their own commitment[11].

Liability for tax obligations

In an attempt to define the tax liability for someone else's debt, it can be pointed out that this is an option to "demand the payment of tax on entities carrying out such liability next to or instead of demanding such payment by the taxpayer, and sometimes also the payer (incassent), including through the enforcement of the obligation by force" 12 .

Consequently, tax liability may concern:

• • tax liability 13 ,
• • not collected or collected but not paid tax 14 , and
• • tax arrears[15].

The biggest responsibility is liability for tax obligations 16 , applicable to both legal obligations 17 , and those arising from the service of the decision of the tax authority (fixing the amount of this obligation)[18].

The necessary condition for liability is not to create tax arrears in this case and therefore liability may arise even before the deadline for payment of that obligation.[19]. On the other hand, the condition that the liability of those liable for tax arrears is not only a tax liability, but also the expiry of the payment deadline, i.e. tax arrears will arise[20]. This is the responsibility of individuals third in the light of the provisions Tax Ordinance[21].

Tax liability of persons third

In conclusion, when examining the types of events underlying liability, it should be assumed that liability for tax liability – tax arrears – of persons other than the taxpayer may arise as a result of the occurrence of third types of event[22].

To first the type may include the cessation of the legal status of the taxable person 23 , which may consequently cause responsibility in two forms, i.e. taking over the duties of the predecessor under the general tax succession 24 or liability under a specific legal provision[25].

Situation second if the taxable person fails to fulfil his obligation in an appropriate manner and within a time limit which results in the liability of another entity, or if the enforcement proceedings carried out have found ineffective enforcement of the taxpayer's assets.

The unsuccessful execution in this case causes not only the liability of another person but also the possibility of demanding the enforcement of obligations under tax law. third the situation is in the case of a non-collection or non-payment by the obliged entity.

The institution of liability for someone else's debt serves, in principle, the protection of the interest of the Treasury (local government unit) as a creditor for tax obligations 26 , it is therefore intended to obtain payment by the tax creditor of his claims when the taxable person himself is unable to perform the obligation to pay.

The basis of liability of another entity is 27 :

• • the income from the activities of another taxable person 28 ,
• • acquisition of certain assets 29 ,
• • use/use of the assets of another taxpayer 30 ,
• • operating by another entity having legal personality 31 ,
• • management of a specific entity and carrying out certain obligations related thereto[32].

Therefore, the responsibility of these entities is most often due to the existence of a relationship (usually economic, actual) between the person who corresponds to the taxpayer (payer, collector)[33], which manifests itself in gaining a property benefit as a consequence of such a relationship[34].

However, the members of the board of directors of the limited liability company and the public limited liability company shall be liable, whether or not they have actually received any assets[35].

According to this thesis 36 , The nature and purpose of the liability of the members of the board of directors of the capital company for tax obligations is not limited to the State Treasury’s desire to ‘obtain a public-law debt from an entity that could obtain a property benefit at the expense of a public-law entity (e.g.

acquisition of assets, corporateity, division of a legal person, lessee property, etc.), but “force” on board members to perform their obligations under bankruptcy and resolution law.”

Consequently, it should be considered that if the members of the Management Board report in due time one from the conclusions 37 , i.e. an application for bankruptcy or for the opening of a sanitation procedure[38] or failure to file a bankruptcy application without the fault of a board member, and the tax creditor will still not recover his public claims, and the board members will be free of liability for tax arrears.

The tax liability (responsibility for tax arrears) of persons other than the taxpayer is the exception to the principle that everyone is liable for their own actions and omissions. Consequently, the provisions Tax Ordinance concerning the liability of persons third should be interpreted strictly[39].

It should be stressed that the burden of proving the grounds for the possible liability of persons third for the tax liability of another taxable person on tax authorities 40 , and this obligation cannot be transferred to a person third.

Procedure for tax liability of a person third[41] may not be initiated before: the deadline for payment of the commitment fixed or before the date of notification of the decision:

• • determining the amount of the tax liability,
• • the tax liability of the payer or collector,
• • on the refund of the advance payment of the input tax on goods and services,
• • determining the amount of interest due on delay,
• • determining the amount of tax arrears in question under Article 52 overpayment or refund of tax to be recovered without a call from the tax authority, and Article 52a reimbursement of remuneration of payers or collectors unduly collected[42].

In addition, a person’s tax liability procedure third may not be initiated before the date on which enforcement proceedings are initiated and before the date on which enforcement measures are withdrawn.

Consequently, the tax liability of a person cannot be initiated third pending the adoption of the relevant decisions addressed to the original debtors[43]. As an exception, a situation where a decision addressed to the original debtor is not required before a personal liability procedure is initiated third.

This applies where, in accordance with the rules on enforcement in the administration, it is possible to issue an implementing title on the basis of a declaration made.

For liabilities: arising in certain cases Under Articles 8 and 21(1)(1) Tax Ordinance[44], an administrative execution shall also be applied where these obligations arise from the declaration or statement made by the taxable person or the payer. In this case, it is unnecessary to issue a tax decision, since the taxpayer’s obligation 45 results from his tax return.

Subsidiarity of person liability third is the result of an additional restriction – the condition for initiating proceedings on the liability of persons third is the opening of enforcement proceedings against the original debtor[46] (when the tax liability arises from the declaration).

The designated editorial board forces the tax authorities to act more quickly in relation to the original debtor, but does not deprive them of the right to a person's liability third, although the original enforcement procedure has not yet been completed.

On the other hand, previously applicable provisions, indicated an additional condition for the compulsory performance of the person's obligation third – i.e. finding that the original debtor is ineffective[47].

This condition has been modified[48]. The current provision indicates that enforcement of an obligation resulting from a person's tax liability decision third may be initiated only if:

• • enforcement of the taxpayer’s assets has been found in whole or in part
• • unsuccessful,
• • no enforcement measures have been taken or
• • the administrative execution was not undertaken as a result of the enforcement authority's failure to obtain an amount in excess of the execution expenditure during the administrative execution.

Consequently, given the current rates of collection of tax on goods and services in Poland, this regulation on liability of persons third the tax liability of the taxpayer, in particular members of the board of directors of capital companies, is far from sufficient.

The practice of unfair taxpayers indicates that after the transaction (i.e. As a rule, steps are taken immediately after the date on which the VAT liability was incurred. 49 to liquidate and remove the entity from the National Court Register.

These taxpayers also take factual action to extend control activities or tax proceedings[50], to de-register the taxpayer[51] before the dimensional decision of the tax authorities.

It should be pointed out that the main objective of unfair taxpayers is to bring about a loss of legal status of the entity (VAT payer) before a dimensional decision is issued in respect of that taxpayer, in particular before a decision on the approximate value of tax arrears and before a decision on asset security.

In that case, i.e. before issuing a dimensional decision in relation to the taxpayer, the tax authorities shall not be entitled to take a decision on the liability of the person third to former members of the board of directors of the capital company.

In view of the above, the current provisions Tax Ordinance do not provide an effective legal basis to satisfy the State Treasury for tax claims in the tax on goods and services.

Criminal liability for VAT arrears

A separate issue concerning liability related to backlogs in the tax on goods and services is the issue of tax liability in relation to members of the board of directors of the capital company.

The primary condition constituting fiscal criminal liability is to commit a criminal offence intentionally or inadvertently if the provisions of the Code of Criminal Tax (hereinafter ‘K.k.s.’) so provide.[52].

It should be stressed that a member of the board of directors is not sufficient for a financial investigation authority or prosecutor to identify irregularities in the settlement of public law obligations, in particular tax obligations.

In order to establish criminal liability, it is necessary that the member of the board at least reconciles (in the case of intentional offences) to irregularities in tax settlements[53].

It is important to emphasise the element of intent to commit tax criminal offences, as these offences, in principle, concern members of the board of directors of a capital company and require deliberateness.

Whereas fiscal criminal offence relating to the calculation of the tax on goods and services, the focus should be on Article 56 k.k.s.54 and Article 76 k.k.s.55. fiscal criminal offence, which is tax fraud (and fiscal misdemeanour is defined as the preferred type) under Article 56 k.k.s.

The concept of tax fraud is closely related to the institution of self-calculation[56]. Article 56 k.k.s. is of a blank character, i.e. specificisation occurs in individual tax laws laying down rules for self-calculation[57]. The essence of this provision is the exposure of public debt to depletion.

fiscal criminal offence or fiscal misdemeanour specified in this provision can only be made intentionally (both in direct and resultant intent). An unintentional error is therefore not a prohibited act, a particular under Article 56 k.k.s.

However, the scope of this provision does not cover the extortion of an undue tax refund, since that act is defined in another provision of k.k.s.58. Article 56 k.k.s. covers only cases of false information affecting the amount of the tax liability.

Summary

It should be stressed that the current regulations of K.k.s. already provide the legal basis for safeguarding fiscal interests of the State Treasury in respect of VAT criminal offences committed.

The institution of refunding the acquired asset benefit or equivalent shall be an effective tool for the collection of a material benefit in the form of an unwarranted refund of the tax on goods and services.

The current regulations, which are effectively used by law enforcement authorities, would give the opportunity to fight effectively for the budgetary revenues due.

On the other hand, the legislator has amended the provisions of the Criminal Code (the Criminal Code: k.k.) 59 (in particular concerning the definition of new invoicing offences with a significant amount of claims, 60 , falsification of invoice documents 61 and invoices of false 62

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1 In accordance with the provisions of the Criminal Code (hereinafter: k.k.), Journal of Laws of 2018, item 652. 2 A. Mariański and Others, Liability of members of the board of directors of the company z o.o., du. 2, C.H. Beck Publishing House, Warsaw 2006. 3 A.

Mariański, The basis of liability in tax law on the example of members of the board of directors of the company z o.o., MoPod 2004, No 1, p. 31. 4 W. Czachórski, Commitments. Summary of the lecture, Warsaw 1994, p. 43. 5 B. Brzeziński, Liability of the taxpayer, payer and collector in tax law, Toruń 1993, p. 6. [6] Ibid. p. 7.

7 Act of 11 March 2004 on tax on goods and services, i.e. Journal of Laws of 2017, item 1221 as amended 8 According to Article 526 Civil Code of 23 April 1964 (Further: k.c.), i.e. Journal of Laws of 2018, item 1025. [9] Article 107-119 Tax Ordinance, i.e. Journal of Laws of 2018, item 800. 10 A.

Marianski and Others, Responsibility..., op. cit. 11 A. Mariański, Laws and obligations of legal successors in tax law, Warsaw 2001. 12 A. Mariański, Responsibility for obligations of the taxpayer, payer, collector in Polish law, Warsaw 1999, p. 13-14. [13] Article 26 and Article 29 Tax Ordinance. [14] Article 30(1) Tax Ordinance.

[15] Article 107(1) Tax Ordinance. 16 W. Olszowy, Some Legal Matters of Tax Liability, Acta Universitatis Lodziensis, Folia Iuritica 1992, No 54, p. 86-87. [17] Article 21(1)(1) Tax Ordinance. [18] Article 21(1)(2) Tax Ordinance. 19 This is in particular the responsibility of the taxpayer, the spouse and the legal successor.

[20] Article 51(1) Tax Ordinance. 21 According to Article 107-119 Tax Ordinance. 22 A. Marianski, Rights and duties of successors..., op. cit., p. 21 and next. 23 For example, the death or liquidation of a taxpayer. 24 Joining all its rights and obligations under tax law. 25 No legal implications under the general title. 26 A.

Marianski, Liability of Persons third by regulation Tax Ordinance, Gloss 1998, No 4, p. 1. 27 A. Marianski, Responsibility for the obligations of the taxpayer... op. cit., p. 11. 28 For example, a spouse, divorced spouse, family member of the taxpayer.

29 For example, the acquirer of the property, a legal person was created by the division of another legal person. 30 E.g. lessee real estate, leasing provider, lessor of things or property rights, And corporate.

31 For example, a partner of a civil partnership, a public partnership, a joint stockholder or a limited partnership, not a shareholder. 32 For example, a member of the board of directors of capital companies and other legal entities. 33 The President Tax liability of family members of the taxpayer and other persons third, Warsaw 1973, p.

14. 34 A. Marianski, Liability of Persons third for tax liabilities – grounds and exemptions, Gdańsk 2004, p. 10. 35 E.g. on remuneration for serving as a board member. 36 A. Marianski and Others, Responsibility..., op. cit. [37] Article 116 section 1 point 1) Tax Ordinance.

38 At that time, restructuring proceedings within the meaning of the Restructuring Law were opened (i.e. Journal of Laws of 2017, item 1508) or approved the Agreement in the procedure for approval of the Agreement referred to in the Restructuring Law. 39 M.

Kalinowski, Borders on the legality of tax avoidance in the Polish tax system, Toruń 2001, p. 59. 40 A. Mariański, Glosa do wyr. NSA z 24 July 2002 (SA/Sz Regulation (EU) 1508/2001), Gloss 2003, No 3, p. 34-36. 41 According to Article 108(2) Tax Ordinance.

42 Provision Article 108(2)(2) point (e) added by Article 1(87) point (a) Act on 10 September 2015 (Journal of Laws of 2015, item 1649) amending this Act from the date of 1 January 2016 43 According to Article 108(2)(1)(2) Tax Ordinance. 44 Case where an obligation arises at the moment of an event specified in the Act.

45 Tax liability of the taxpayer or payer. 46 According to Article 108(2)(3) in conjunction with section 3 Tax Ordinance. 47 A. Marianski, Liability of Persons third..., op. cit., p. 151-158.

[48] Article 108(4) modified by Article 45(7) point (c) Act on 10 July 2015 (Journal of Laws of 2015, item 1269) amending this Act from the date of 1 January 2016 49 Among others: adoption of a resolution to open liquidation of a capital company.

50 For example, by withdrawing all members of the board of directors of the capital company and not appointing a new board of directors. 51 Loss of legal existence by the capital company as a result of the winding-up procedure and the removal of the capital company from the National Court Register.

[52] Article 4(1) IRS Penal Code with 10 September 1999, i.e. Journal of Laws of 2017, item 2226. [53] Article 4(2) k.k.s. [54] Article 56. k.k.s. – providing untruth or concealing the truth or not informing about the change of data: section 1.

A taxable person who, by submitting a declaration or a declaration to the tax authority, to another authorised authority or to a payer, gives an incorrect statement or conceals the truth or fails to comply with the obligation to notify a change to the data covered by it and thereby exposes the tax to depletion shall be fined until 720 the daily units or penalties for imprisonment, or both, together.

section 2. If the amount of tax exposed to depletion is of low value, the perpetrator of a specific prohibited act Under section 1 is fined until 720 daily rates. section 3.

If the amount of tax exposed to depletion does not exceed the statutory threshold, the perpetrator of a specific prohibited act Under section 1 is fined for fiscal misdemeanour. section 4.

Specific penalty Under section 3 the taxable person who, despite the disclosure of the subject matter or the taxable base, does not submit a declaration or declaration or a declaration to the tax authority or payer within the time limit, or, contrary to the obligation, does not submit it by electronic means. [55] Article 76 k.k.s.

— exposure of the tax authority to undue reimbursement of public debt: section 1.

Who, by providing factually incorrect data or concealing actual facts, misleads the competent authority, subjecting to an undue reimbursement of public liability, in particular input tax within the meaning of the provisions on customs duties on goods and services, excise duty, reimbursement of overpayment or crediting it with tax arrears or current or future tax obligations, is liable to a fine to 720 the daily units or penalties for imprisonment, or both, together.

section 2. If the amount exposed to an undue refund of the tax is of little value, the perpetrator of a specific prohibited act Under section 1 is fined until 720 daily rates. section 3.

If the amount exposed to an undue refund does not exceed the statutory threshold, the perpetrator of a specific prohibited act Under section 1 is fined for fiscal misdemeanour. 56 P. Cardas, G. Labuda, T. Razowski, Tax Penal Code. Commentary, Issue III, Warsaw 2017. [57] Ibid. [58] Ibid. 59 Act of 6 June 1997 Criminal Code, i.e.

Journal of Laws of 2018, item 652. [60] Article 277a k., Article 277b k., Article 277c k., Article 277d k.k. [61] Article 270a k.k. [62] Article 271a k.k.