Limitation of tax and social security contributions
This article discusses the general rules related to the expiry of the limitation period for tax liabilities towards the tax and contribution authorities towards the Social Insurance Institution (hereinafter: ZUS).
Prescription of a liability as an extinction of a tax liability
The Tax Code provides for various forms of tax liability expiry. The commonly known form is payment or set-off. One of them is also expiry due to limitation.
The statute of limitations on a tax liability means that after a certain period has elapsed, the taxpayer does not have to pay it. This means that after a certain period of time, the tax authorities cannot effectively demand the taxpayer to pay the tax or the interest resulting therefrom.
The limitation of obligations may occur as a result of an administrative decision or under the law.
The obligation relationship, in principle, ceases to exist.
While the idea of statute of limitations seems simple, it can raise many doubts in everyday life. About what later in the article.
As mentioned above, the tax liability expires with the passage of time. Depending on how it was created, the limitation period may be different.
For taxpayers, the provisions of Art. 70 § 1 of the Tax Ordinance, according to which the tax liability expires after 5 years, counting from the end of the calendar year in which the tax payment deadline expired.
The taxpayer submitted PIT returns for 2011 in March 2012. The deadline for submitting and paying the tax expired on April 30, 2012. The tax liability for 2011 will therefore expire only at the end of 2017, i.e. five years from the end of 2012.
The most common situations in which taxpayers are required to calculate and pay the tax themselves. However, there are also circumstances in which the tax obligation arises as a result of a decision issued by tax authorities.
The tax liability does not arise when the decision establishing the amount of the tax liability was delivered three years after the end of the calendar year in which the tax obligation arose. However, it should be remembered that the limitation of the right to issue a decision is possible only in relation to tax liabilities that do not arise by law, e.g. payment of agricultural tax, real estate tax.
Then, the tax liability expires after three years from the end of the calendar year in which the tax obligation arose, or after five years, if the taxpayer did not submit the declaration on time or did not disclose part of its income in it, as a result of which the tax office issued a decision determining the amount concealed earnings and the amount of tax payable.
Note at the end of terms
The increased activity of the tax office may manifest itself before the end of the limitation period. Sometimes, when the tax liability expires less than three months, the tax authority may make the decision immediately enforceable, which results in more effective enforcement of unpaid tax, even if the decision is not final and the taxpayer is entitled to an appeal in the form of an appeal.
Limitation period for the obligation
Five- and three-year periods are the basic limitation periods for a liability. They may be extended as a result of interruption or suspension of the limitation period.
For example, the limitation period is suspended when an action is brought before the court against the decision on the tax liability. Another premise is the notification of the taxpayer of the commencement of fiscal penal proceedings regarding failure to comply with the tax obligation.
In addition, the limitation period is interrupted as a result of the enforcement measure. What is important here is not so much the correct notification of the taxpayer as the actual execution of enforcement activities. An example of an enforcement measure is the seizure of a car, property or bank account.
It is worth noting that the tax authority is entitled to apply even several enforcement measures, if the collection of receivables under one of them does not bring the result. The use of each successive measure breaks the limitation period.
Controversy related to mortgage and tax lien
Tax authorities have the option of securing the tax liability with a mortgage or a fiscal lien. Such security by the tax office results in the fact that the tax debt is not time-barred, as this type of security is of a material nature.
The material nature is understood as a situation in which the liability is not necessarily borne by the taxpayer, but any other person who comes into possession of, for example, real estate (in the case of a mortgage) or a movable property (in the case of a fiscal lien), encumbered with these rights. Moreover, the material nature of liability means that after the expiry of the limitation period, tax liabilities may be enforced only against the subject of the mortgage or pledge.
Thus, the legislator provided for an exception to the general rule in the Tax Ordinance, according to which the tax liability expires after five years, counting from the end of the calendar year in which the tax payment deadline expired.
The Constitutional Tribunal took the floor on this matter (judgment of 8 October 2013, file ref.no. SK 40/12). The Tribunal ruled that the complete lack of limitation of receivables secured by a compulsory mortgage exceeds the scope of the legislator's regulatory freedom and violates the principle of equal treatment.
People who own real estate and movable property are in a worse position than those who have only current assets (e.g. goods, products). Only in relation to the first group, the tax authority may establish a mortgage and a fiscal lien. Therefore, the liabilities of this group of taxpayers may never expire.
Such an assumption violates the constitutional principle according to which ownership, other property rights and the right of inheritance are subject to equal legal protection for all (Article 64 (2) of the Basic Law).
The Constitutional Tribunal ruled that the current provision on the application of mortgage and fiscal lien raises serious doubts and requires re-regulation by the legislator.
Every taxpayer has the right to prescribe a tax liability, regardless of what security the tax authority has established on their property. In practice, due to the unconstitutionality of Art.70 § 8 of the Tax Ordinance, taxpayers on whose property the office established a mortgage or fiscal pledge may raise a statute of limitations in tax proceedings.
The unlawfulness of the tax office
Tax authorities cannot demand the performance of a tax liability that has expired, which unfortunately happens in practice. It should be emphasized here that such action of the authority is illegal! In such a case, a letter should be submitted to the authority in which there will be allegations of unjustified execution, including a request to discontinue it.
The legal basis for the allegations is, of course, the statute of limitations on the tax liability. The taxpayer has 7 days from receiving the enforcement title.
It should be borne in mind that the lodging of an objection does not have to result in the suspension of the proceedings, at least until the objection is examined. Only in justified cases, the tax office may suspend enforcement activities, e.g. due to the applicant's financial situation.
If the activities of the tax authority exceed the cognitive capabilities of the taxpayer, it is worth contacting a tax advisor who will help you prepare an appropriate application.
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Statute of limitations against ZUS
Similar rules as in the Tax Ordinance apply to overdue ZUS contributions. Their maturity may also be statute-barred. In this matter, the act was amended, which resulted in the shortening of the limitation periods.
It should be remembered that since 2012, as in the tax regulations, the limitation period for ZUS contributions is five years, counting from the date on which their payment deadline expired.
This term results from the literal wording of Art. 11 point 1 of the Act of 16 September 2011 on the reduction of certain obligations of citizens and entrepreneurs (Journal of Laws No. 232, item 1378). In art. 27 of the Act, the rules for calculating the expiry date of the liability due to the limitation of contributions due before January 1, 2012 and the rules for the limitation period for contributions unduly paid before that date.
As a reminder, the deadline for paying contributions is the 5th, 10th or 15th day of the month for the previous month.
The limitation period for liabilities in the form of receivables due to contributions, which started before January 1, 2012, will take place after 5 years, counting from January 1, 2012.
On the other hand, if the limitation of the liability for contributions, which began before 1 January 2012, would occur earlier - in accordance with the provisions in force before that date - the limitation of the liability will be effective after 10 years, counting from the date on which the receivables in question became fixed. become due.
ZUS contributions were due as of January 7, 2012. The provisions after the amendment apply, i.e. contributions will expire after five years from January 7, 2012 - January 7, 2017.
ZUS contributions were due on February 12, 2007. According to the “old” regulations, the liability is statute-barred after 10 years from February 12, 2007, i.e. February 12, 2017.
According to the "new" regulations, contributions will expire after five years, counting from January 1, 2012, that is January 1, 2017.
When can the old rules be exceptionally applied?
As already mentioned, as of January 1, 2012, the limitation period for ZUS contributions is five years from the date on which their payment deadline expired. Basically, if the arrears arose before 2012, the limitation period should also be counted from January 1, 2012.
An exception to this rule is the rule which says that the taxpayer may apply the "old" rules when the statute of limitations applies to payments for contributions from before 2012, which, according to the then regulations, would expire earlier than in 2017, the taxpayer may continue to apply 10 -year run of the limitation period for the obligation.
The taxpayer has a contribution arrears from 2005. In 2015, 10 years have passed from the date of their maturity. According to the "new" rules, 5 years should be added to 2012, i.e. in 2017. As the statute of limitations under the "old" rules is before 2017, the rules from before the amendment can be applied.
Suspension of the limitation period for ZUS contributions
The time periods in which the limitation period is suspended are excluded from the calculation of the 5-year period from the maturity date of contributions.
In fact, the limitation period which has elapsed before the suspension and after the suspension should be added together. This results in the limitation of receivables later than 5 years.
The legislator provided for the following situations, when the limitation period for the obligation is suspended:
1.from the conclusion of an agreement on spreading overdue payments into installments or postponing the payment date until the date of payment of the last installment or deferred premium due (note: in the event of concluding an agreement on deferment of payment, the limitation period will not start),
2.from the date of taking the first action aimed at enforcing the outstanding amounts due to the end of the enforcement proceedings,
3.when the issuance of a decision depends on the resolution of a preliminary issue by another authority or a court, the period of suspension shall run until the date on which the decision of another authority becomes final or the court's decision becomes final, but not longer than for two years,
4.from the date of the testator's death until the date of the court's decision on the acquisition of an inheritance or registration of the inheritance certificate, but no longer than until 2 years have elapsed since the testator's death.
Interruption of the limitation period for ZUS contributions
ZUS has many options to stop the limitation period for obligations due to unpaid contributions. For example, the limitation period for overdue contributions is interrupted when ZUS takes steps to recover the overdue contributions. Moreover, a similar effect is caused by issuing a decision on the determination of the obligation to be subject to social insurance or in the scope of the basis for the assessment of contributions, the obligation to pay contributions for such insurance.