Write-off of interest on tax arrears

Every entrepreneur should remember about the necessity to pay the tax - its timely payment is one of the most important obligations in business activity. If the deadline is exceeded, the taxpayer becomes a tax debtor, and as compensation for failure to fulfill obligations, in addition to the arrears themselves, he will also have to pay interest.

If the entrepreneur remembers relatively quickly about the failure to fulfill his obligations, the amount of interest should not be significant. What's more, if it is lower than three times the fee for a registered mail of Poczta Polska - currently PLN 6.60 - then you do not have to pay interest. However, what if the penalty for arrears has grown to a sum so large that its settlement may adversely affect the financial situation of the entrepreneur?

In such a case, the Tax Ordinance provides for the possibility of postponing, dividing into installments, and even redeeming the interest for late payment in whole or in part.It is the competent tax authority that decides whether or not to grant this type of tax relief, based on an application submitted by the taxpayer.

What must be in such an application? In addition to the obvious formal data, the essence of the application is its justification. Pursuant to the aforementioned Ordinance, the remission of interest may be granted only when it is justified by an important interest of the taxpayer or the public interest.

At this point, it is worth considering the meaning of the above-mentioned terms, because neither the Tax Ordinance nor any other act contains their definitions. In practice, an important interest of the taxpayer is a situation in which, for random reasons, not attributable to the applicant or beyond his influence, he is not able to settle the statutory interest accrued. The most common indications here are a long-term illness or extraordinary situations, such as a fire or a flood. On the other hand, the public interest will be violated in a situation where the taxpayer, as a result of the settlement of penalty interest, will be forced to use public aid, unable to support himself, his family, company, etc.

It is worth remembering that in addition to the justification, it is necessary to attach to the application all documentation regarding the situation. These may be, for example, medical certificates, information on the family's income and living conditions, data on the company's financial condition, etc. The better the application is supported, the greater the chances of a positive consideration by tax authorities.

It should also be added that if the taxpayer asks for the redemption of the interest itself, it must necessarily pay the arrears on which it was accrued. The lack of obligation to pay the penalty amount applies only to the interest that arose up to the date of submitting the application. If, on the other hand, the arrears are still not paid, interest will still be charged and will have to be paid.