Taxpayer’s Breach of Fiscal Obligations: Extension of Responsibility Premises

1. Introduction
Unlike legislation in force in other jurisdictions, Tax Proceedings Law No. 11,683, as amended (“LPT”) does not contain any provision allowing main taxpayers’ responsibility in relation to those fiscal obligations they must fulfill to be automatically extended to third parties. To extend such liability a proceeding it must take place and certain facts should be proved.
In the following paragraphs we will comment on the ruling issued on April 8, 2014 by the Supreme Court in docket “DGI (autos Lavezzari José Luis – TF 21491-I) c/ DGI”.  In this ruling the Supreme Court limited the intention of the Federal Tax Authority (“AFIP”) to extend the responsibility of a certified public accountant for the alleged breach of his fiscal obligations to a taxpayer.

2. The case
This case began when the AFIP assessed that certified public accountant Mr. José Luis Lavezzari was jointly responsible with one of his clients, Mr. Guillermo Fernando Posadas, for the latter’s alleged debt in relation with periods December 1996 thru December 1997 of Value Added Tax.
The AFIP supported its claim in section 8, subsection e) of the LPT, pursuant to which third parties that aid tax evasion, by means of negligence or wilful misconduct, are responsible with their own assets and jointly liable along with the main taxpayer.  AFIP understood that Mr. Lavezzari’s situation fell under this case, despite no analysis of the main taxpayer’s (Guillermo Fernando Posadas) behavior so as to determine whether any of the infractions set forth in the LPT had been committed.
When assessing the alleged debt claimed to Mr. Posadas, the AFIP refrained from imposing him a fine pursuant to section 20 of Criminal Tax Law No. 26,769, as amended, since a criminal complaint for the alleged commission of tax evasion had been made.  No conviction has been made in the criminal proceeding that began as a consequence of the above-mentioned complaint.
The docket was subject to the Supreme Court’s decision after the AFIP filed several appeals against the National Tax Court and later on the First Panel of the National Contentious Administrative Chamber of Appeals’ rulings through which its claim had been dismissed.

3. The Supreme Court’s ruling
After analyzing the background of the case, the Court, pointed out that the claim of the Tax Authority in order to extend to Mr. Lavezzari the liability for the alleged breach of Mr. Posadas was being questioned; that is to say, a liability of a third-party debt, based on the provisions of Section 8, sub section e) of the LPT.
Thus, the Court stated that to extend the liability grounded in the rule mentioned above, along with the assessment of the alleged claim from the main tax payer, a tax evasion of the main taxpayer must be proved and that the third party (in this case, Mr. Lavezzari), by its negligence or wilful misconduct, aided such evasion.
In this regard, the Court ruled that it is foreseeable that there is a resolution judging the behavior of the person liable for their own debt, and has had configured a tax evasion. Along with this, the Court explained that the demonstration that the main debtor infringed the law is one of the main conditions to prove if the third party, for his own negligence or wilful misconduct, has helped to such evasion.
To the extent that any of this conditions are verified in the case, since: (i) the Tax Authority had refrained from applying a punishment because a criminal complaint was formulated against the tax payer, and (ii) until that time, a judgment in the criminal proceeding had not been issued; the Court understood that the claim of the Tax Authorities based on the extension of a joint liability of Mr. Lavezzari with Mr. Posadas, had no legal grounds, therefore it should be dismissed.

4. Conclusion
In its ruling, the Supreme Court specified the premises that must concur so as to extend main taxpayer’s responsibility for the breach of those fiscal obligations they must fulfill to third parties pursuant to section 8, subsection e) of the LPT.  According to this ruling, the AFIP must previously evaluate the conduct of the main taxpayer so as to assess whether a tax evasion was committed; or the criminal conduct of the main taxpayer must have been ruled upon within a criminal proceeding.  Unless any of these situations concur, any claim to extend the taxpayers’ liability to third parties pursuant to section 8, subsection e) of the LPT will be dismissed since its premises will be absent.