The treasury can still artificially initiate tax criminal proceedings against citizens solely to suspend the statute of limitations of their tax liabilities. The ability to verify the final decisions of the tax authorities and access to documents containing tax secrets are also limited. Entrepreneurs seeking protection against such actions by the treasury are left with the option to fight in court.
Taxpayer as the perennial debtor of the tax authorities
If the tax authorities have not taken any actions against the taxpayer during the period of the statute of limitations of the tax liabilities, whose aim would be to check the correctness of their settlements or to enforce the ascertained liabilities, the passing time may strengthen the taxpayer’s belief in the correctness of the settlements made. The long period of limitation in which the tax authorities have time to check the taxpayer, however, has the drawback that the longer the authorities procrastinate with the control, the harder it is to undertake it thoroughly. Over time, it becomes more difficult for the taxpayer, for instance, to prove the origin of his assets. Such prolongation of the proceedings thus becomes a kind of trap also for honest taxpayers – ruled already in 2012 by the Constitutional Tribunal. The tribunal added that although committing tax irregularities should be assessed very negatively, this is not a sufficient premise to enforce tax liabilities for decades (judgment of June 19, 2012, sign. act P 41/10). A taxpayer cannot be the perpetual debtor of the State Treasury, surprised by the actions of the tax authorities – ruled by the Voivodeship Administrative Court in Szczecin (judgment of August 22, 2018, sign. act I SA/Sz 378/18).
Why does this happen?
In reference to Article 70 § 1 of the Tax Ordinance, the tax liability becomes barred after 5 years, counting from the end of the calendar year in which the tax payment deadline passed. But the treasury has at its disposal a tool with which it can artificially extend the limitation period of taxpayers’ liabilities for years. This is § 6 subsection 1 of this article, according to which the limitation period for the tax liability does not start, and once started, it is suspended, from the day of initiating proceedings on a tax offence or misdemeanour, of which the taxpayer was notified, if the suspicion of committing an offence or misdemeanour is related to non-performance of this liability.
All the authorities have to do is, even on the day before the aforementioned five-year period expires, issue a decision to initiate tax criminal proceedings against the taxpayer and serve him with it within this period. This will give the authorities another few months and years to carry out verification of the taxpayer.
Regulation inconsistent with the Constitution of the Republic of Poland
The tax authorities have one more stick to beat taxpayers with. It’s Article 70 § 8 of the Tax Ordinance, which provides that tax liabilities secured by a mortgage or treasury pledge do not become statue-barred, but after the period of limitation has passed, these can be executed only against the object of the mortgage or pledge. Until the end of 2002, this provision, almost in the same wording, was labeled as “Article 70 § 6”. In 2013, the Constitutional Tribunal ruled it to be inconsistent with the Constitution of the Republic of Poland – specifically with Article 64, section 2, i.e. the principle of equal protection of rights for all. It completely excludes the limitation of certain types of tax receivables on the basis of an unjustified and arbitrary criterion in the form of a form of securing these tax receivables (sign. act SK 40/12). Although this provision currently operates under slightly changed wording as Article 70 § 8, according to the Supreme Administrative Court ruling of August 4, 2021 (sign. act III FSK 3865/21), the afore-mentioned CT ruling should also be applied to this provision and consider it incompatible with Article 64 sec. 2 of the Constitution of Poland.
Limited access to case files
The Ombudsman intervened in the matter of both of these controversial provisions. He also pointed out that under the current law, the Ombudsman has the possibility of obtaining access to the files of a tax proceeding only after formally notifying his participation in proceedings before an administrative court. The Ombudsman cannot review the files without this, as the authorities invoke tax secrecy. This makes it more difficult for the Ombudsman to carry out his statutory tasks in the tax field.
The problem is known, but
The ombudsman reported about his intervention in the Ministry of Finance in this matter already in 2022. As the Ombudsman pointed out, artificially initiating tax criminal proceedings by authorities solely to interrupt the statute of limitations of tax liabilities is a practice used by these authorities for many years. A petition to examine the legal basis for these practices has been lying in the Constitutional Tribunal for almost 10 years now. Another problem is the provision of Article 70 § 8 of the Tax Ordinance. Appeals of successive terms of the Ombudsman to remove Article 70 § 6 point 1 from the Tax Ordinance have not been successful.
The then Minister of Finance declared that the problem of instrumentally initiating tax criminal proceedings solely to prolong the limitation period of taxpayers’ liabilities is known to the ministry and is to be solved by amending the provisions. However, the changes proposed in the project dated June 13, 2023, not only did not fix the situation but were aimed at further expanding and extending the institution of the limitation of tax liabilities.
Declarations of changes are made
In the announcement of February 1, 2024, the Ombudsman informed about the letter sent to the new Minister of Finance asking for intervention in this matter. And here there was a glimmer of hope. At the beginning of March 2024, the Ombudsman received a response in which the Undersecretary of State in the Ministry of Finance, Jarosław Neneman, declared that he agreed with the Ombudsman’s postulates: to eliminate the non-expurability of tax liabilities secured by a mortgage or treasury pledge and to extend the scope of the Ombudsman’s access to tax files. He declared that the issue of eliminating the reason for suspending the limitation period of a tax liability in connection with the initiation of proceedings for a tax offence or misdemeanour will also be considered. The Ombudsman’s postulates are to be taken into account in the upcoming amendment of the Tax Ordinance.
Summary
Until the implementation and fulfillment of the Ombudsman’s postulates, the road can unfortunately still be long. Taxpayers are therefore still left with the option of seeking protection in courts, which have for many years fortunately sided with entrepreneurs in such cases. Of course, those entrepreneurs who decide to fight the tax authorities in court. And not everyone will certainly dare to do so.
Author: Robert Nogacki, legal counsel, managing partner, Skarbiec Law Firm, specialising in legal, tax and strategic advice for entrepreneurs.
Source: https://ceo.com.pl/skarbowka-kontra-przedsiebiorcy-walka-o-uczciwosc-w-postepowaniach-podatkowych-trwa-w-sadach-61047
