A singular interpretation of the intent to commit tax evasion crime

As per the facts described in the ruling, the Tax Authority (Administración Federal de Ingresos Públicos – AFIP) sustained that Mr. Gerold had committed a tax evasion offense because he had declared certain gratuities (gratificaciones) received from the shareholder of his employer as exempted, arguing that they were a gift. The taxpayer had declared these gratuities when submitting his tax return, but did not tax them because he considered them to be exempt.

Both, the first instance judge and the Court of Appeals on Economic and Criminal Matters (Cámara Nacional de Apelaciones en lo Penal Económico) ruled in favor of the taxpayer.

What is noteworthy here is that the Court of Criminal Reversal confirmed the previous rulings in the understanding that there had been no offense. To rule thus, it argued that the standard of deceit (ardid) or fraud (engaño) required by the Criminal Tax Law is not met by hiding or faking information when submitting the tax return, but afterwards when the tax authority is auditing the correctness of the return and of the payment and the taxpayer displays the deceit or fraud to mislead the auditing.

In our opinion, the main implication of this holding is that the scope of the Criminal Tax Law would be materially reduced to cases where the taxpayer carries out a deceit or fraud when the tax authority is auditing, that is to say, after the tax return was submitted.