Do you know what Tax Debt is? Many people seek in entrepreneurship a way to have the desired income. However, the country’s economic instabilities make it a challenge for some companies to keep their financial situation up to date.
Unfortunately, some debts are not paid and between that creditor that the entrepreneur has a business relationship and sometimes depends on to maintain the viability of the business, and the Tax Authorities – the choice is to leave taxes aside.
Find out how the credits of legal entities (the main debtors) or individuals who are in default with the Tax Authorities are collected and enforced.
Learn more about Tax Debts
The tax enforcement action is the way in which the Public Treasury, that is, the government, tries to receive in court a credit that it believes it has. In general, it is not the first option for receipt and occurs after an attempt to collect at the administrative level.
Thus, if a person has a debt with the government, also called an active debt, this action is called a tax foreclosure and, depending on the case, the government can take the debtor’s assets to settle the outstanding debt. This action is valid for all spheres of government, whether taxes (taxes and fees) or non-taxes (fines, breach of contracts, among others).
What is tax enforcement?
the action of tax foreclosure is determined by Law No. 6,830/80, which defines the application limits of the Civil Procedure Code (CPC) in relation to this type of debt with the government.
Thus, debts with municipalities, states, the Federal District and the Union are governed by the Tax Execution Law and supplemented by the CPC.
Therefore, the law defines the deadlines and actions that the Public Treasury must take to collect tax and non-tax debts from individuals and legal entities through judicial channels.
In addition, it provides for the order of priority of the debtors’ assets that must be seized, placing tax foreclosure as the last resort to which the State can resort to collect an overdue debt.
The process is based on an extrajudicial enforceable title, the Certidão de Dívida Ativa (CDA), and the first order of the judge after the start of the process is to summon the debtor so that he can pay the debt within a period of five days or offer a guarantee in court.
The objective of the tax foreclosure, if the debt is not paid spontaneously, is to carry out the expropriation of the debtor’s assets that are sufficient to pay the debt. According to a survey carried out by the National Council of Justice (CNJ), tax enforcement processes represent about 39% of the total number of pending cases in Brazil.
Tax foreclosure steps
After 60 days of issuing the debt certificate by the Public Treasury, if no amount has been received, the process begins. From then on, the State files a tax enforcement action by the judiciary that follows the following steps, according to Law No. 6,830/80:
- Inicial petition
After the period of 60 days, the Public Treasury files a lawsuit and a judge is appointed to the case. At that time, the amount charged for the lawsuit will be the same as that provided for in the debt.
Upon receiving notice of the initial petition, the debtor has five days to settle the debt with the Treasury, or to nominate assets of values equivalent to the amount of the debt for attachment. At this stage, however, the amount must include interest and late payment.
- Communication and pledge
After the period of five days, if payment or guarantee has not occurred, the debtor’s assets are forced to be seized. For this, the judiciary obeys the following order provided for by the Tax Execution Law:
- Public debt or credit security quoted on the stock exchange;
- precious stones and metals;
- Ships and aircraft;
- Rights and actions.
However, when the debtor is an individual, it is prohibited by law to seize the house that serves as a home, since it is considered a family asset.
- expropriation of assets
If the tax enforcement process is continued due to the failure to offer a guarantee and/or present a defense, the State may proceed with the removal of the assets from the debtor’s property.
- auction and concession
The last stage of tax enforcement takes place with the actual sale of the debtor’s assets.
That is, during the auction and concession stage, the public auctioneers disclose the expropriated assets so that they are sold to other people and the values can be returned to the public coffers.
What are embargoes on tax foreclosure?
Oppose stay of execution is one of the possible means of defense of the debtor taxpayer of some tax credit executed in the tax enforcement records.
The period for filing the stay of tax enforcement is 30 days, starting from three moments:
- Deposit of the amount referring to the disputed tax credit;
- Enclosed proof of bank guarantee for the disputed tax credit;
- Notice of attachment of the debtor’s assets.
With its own procedure for tax executions, this is a lawsuit distributed by dependence on the tax enforcement action in which both are judged together.
According to the Tax Foreclosures Law, the debtor must obligatorily guarantee the judgment, even if it is a very costly and difficult action to file.
Once there is a court guarantee, contrary to what was explained in the pre-execution exception, opposition to the embargoes suspends the enforceability of the tax credit. Thus, the debtor will obtain his negative certificate of tax debts until the final judgment of the process.
According to art. 40, it will be possible to suspend the tax execution process when the debtor is not located or his seizable assets are found. If the process remains suspended for one year, the judge must order the archiving of the records, and the statute of limitations does not run for that period.
In addition, opposing tax enforcement embargoes may have a suspensive effect as long as the four requirements of art. 739-Afrom CPC:
- Petitioner’s request;
- Relevance of the argument;
- Risk of serious damage that is difficult or uncertain to repair;
- Full guarantee of the court through attachment, deposit or guarantee related to the tax credit due.
Thus, any taxpayer, through his or her legally constituted lawyer, can file an embargo on the tax foreclosure or propose an action for annulment of the tax debt, another possible form of defense that a specialist lawyer will evaluate for the best application, as the case may be.
If the debt is expired, it is still possible to claim and request compensation for moral damage. For this, it is essential to have a lawyer specializing in Tax Law to check whether the deadlines have been met on the stipulated dates.