Statute of limitations term to enforce tax credits in the context of reorganization proceedings

On August 11, 2009, the Supreme Court —sharing the Attorney General’s formal opinion—ruled in the case “AFIP – DGI – Incidente de Verificación Tardía No. 17,214/00 – Viñedos El Águila S.R.L. s/ concurso preventivo”, and barred Federal Tax Authority’s credit filings because the statute of limitations had expired.

The company had filed the tax return for tax on minimum presumed income but failed to pay the resulting amount. Afterwards, the judge opened reorganization proceedings and creditors (among them, the Tax Authority) were notified in order to file their credits. However, the Tax Authority did not comply with the first deadline to file its credit or with the second one of 2 years for late filings (‘verificación tardía) as provided in Section 56 of the Bankruptcy Law.

The Tax Authority did file its credit within the five year term provided by Decree-Law No 11,683 on Tax Proceedings (pertinent section sets at five years the term during which the Treasury is empowered to assess, collect and enforce taxes for registered taxpayers).

The Court dismissed the Tax Authority’s extraordinary appeal and confirmed the decision held in prior judicial instances which also applied the two year limitation period set by the Bankruptcy Law.

The Court held that, because of reorganization proceedings’ speciality and universality principles, uniform standards and criteria apply for tax credits and, under such conditions, the limitation period shall be reduced to that which is clearly and unequivocally set by Section 56 of Bankruptcy Law.

In this case, the company had filed the tax return (self-assessment) and had notified the Tax Authority that it could file its credit. In obiter dictum, the Court made it clear that the solution could vary in the event a jeopardy assessment took place, i.e. a situation where the Tax Authority assessed the allegedly unpaid taxes.