Chamber may make it difficult to inspect taxpayers, and auditors react

A project that creates the so-called “Code of Taxpayer Defense” has opened a dispute between Congress, which defends clearer rules on who pays taxes, and members of the Federal Revenue and the State Treasury, who see the possibility of increasing tax evasion and of money laundering.

The text, authored by deputy Felipe Rigoni (União-ES), was approved on May 24, in an emergency regime.

The expectation is that it will be voted on in the Chamber of Deputies in the first half of the year, after public hearings have been scheduled to discuss the preliminary opinion of the rapporteur, Deputy Pedro Paulo (PSD-RJ).

The main points contested by tax auditors are the need for judicial authorization for various investigation procedures and the long process in administrative instances, which could make it impossible to attempt, for example, to combat the creation of orange companies used for illegal purposes.

Other provisions prohibit the Federal Revenue from having access to the taxpayer’s financial transactions without specific judicial authorization.

In 2019, questions related to the topic led the STF (Supreme Federal Court) to paralyze investigations based on reports of financial transactions, such as the case of suspected cracks related to Senator Flávio Bolsonaro (PL-RJ) when he was a state deputy.

The Chamber’s project brings taxpayer rights and prohibitions to the performance of the Revenue. It provides, for example, that the Treasury, in the performance of its duties and in the treatment given to the taxpayer, “will act in such a way as to impose the least burden” on the taxpayer.

In addition, in tax administrative proceedings, it increases the possibility of adversarial proceedings, ample defense and a double degree of deliberation — in other words, it establishes that the decision in this context must be assessed by a second instance.

The proposal says that the taxpayer is not obliged to immediately pay any tax assessment and establishes the immediate exercise of the right of defense.

The text is praised by lawyers specializing in tax law, but rejected by auditors and unions linked to the tax authorities. They point out some devices that, in their assessment, turn the project into what they dubbed the “Code of Defense of the Evader”.

Above all, an article is questioned that says that the Public Treasury is prohibited from blocking or suspending taxpayer registration without a definitive administrative decision from CARF (Administrative Council of Tax Appeals), which can last more than ten years.

Tax auditors claim that this device prevents the inspection of so-called orange companies, used for money laundering and other crimes.

Another criticized article says that the deconstitution of the taxpayer’s legal personality can only be done after a court decision.

“If this project passes, tax evaders, fraudsters, smugglers, militias and gangs will be free to do whatever they want,” says Isac Falcão, president of Sindifisco Nacional, which represents the Federal Revenue’s auditors, in a statement.​

“When they don’t pay their taxes, since the Federal Revenue Service will be prevented by law from inspecting them, someone will have to pay that bill and it will be the real taxpayers, the employees, the consumers.”

Rodrigo Spada, president of Febrafite (which represents state tax inspectors), says he sees no legitimacy in the project, says it was made to please the interests of large groups and is “a gag” for auditors.

According to him, the measure is a maliciously “blank check to the taxpayer”, shields companies from property and opens space for the creation of firms in the name of oranges, without them stopping issuing invoices while they are investigated. “The tax authorities won’t be able to get the weed out of the garden,” says Spada.

There are still questions about how the project can affect operations that investigate various crimes.

“Our concern is that, if this law is approved, the work already carried out will be annulled. In addition, future cases of investigation of evasion and money laundering will cease to exist, since the Federal Revenue will be practically prevented from analyzing the financial movement “, says Flávio Prado, Revenue auditor who works in the state of São Paulo.

He contributed to Operation Descarte, which investigated companies in various fields suspected of irregularities involving politicians, large businessmen in the country and even targets of the Covid CPI.

The author of the text, Deputy Felipe Rigoni, defends the code and says that the intention is to give more predictability to the taxpayer about the rules to be followed by the Revenue.

“Today, the IRS charges a company and gives it 12 hours to pay a fine. If it doesn’t pay, the state registration is suspended. The guy doesn’t even have a chance to defend himself. defense”, he says.

He says that some provisions should change to contemplate the claims of the auditors, among them what prohibits the Revenue from being accompanied, without prior judicial authorization, by a police force in the steps to establish the taxpayer.

“For example, you are at customs, you are at the border. Then you realize that a trafficker is there. You need the police. It will not work if you ask the judge for authorization. In this case, we will make an exception”, says Rigoni. “What we don’t want to happen is for the guy to take the police on a routine visit, which happens a lot.”

He also says that the rapporteur should include a chapter on the duties of the tax payer, in addition to tougher penalties and fines for those who evade taxes.

Deputy Pedro Paulo said he should present his report this Tuesday (28).

Fernando Facury Scaff, who is a lawyer and professor of financial law at USP, counters the criticism of the breach of confidentiality provision. “It is exactly the delimitation of secrecy that is in the Constitution. It is very correct. The fact is that the Federal Revenue has to make more efforts”, he says.

He denies that the project favors evasion. “There has to be respect for the Constitution. And this project is constitutional. Now that’s going to make it difficult [as operações], go, have no doubt. But does that mean you can’t do it? No, it’s just complying with the Constitution.”

Tax lawyer Vanessa Cardoso follows the same line. “What we have seen on the taxpayer’s side, on a day-to-day basis, are many abuses on the part of the inspection, mainly by the Federal Revenue, in investigations and in the assessments of taxpayers. Often violating fundamental guarantees provided for in the Federal Constitution.”

What auditors contest in the project

• need for judicial authorization for investigation procedures
• prohibition that the Public Treasury block or suspend taxpayer registration without a definitive administrative decision from CARF (Administrative Council of Tax Appeals)
• deconstitution of the taxpayer’s legal personality only after a court decision
• requirement of prior judicial authorization so that the Revenue is accompanied by a police force in the steps to establish the taxpayer

What advocates say

• intention is to give more predictability to the taxpayer about the rules to be followed by the Revenue
• increase in defense possibilities in the administrative phase
• veto police monitoring in routine inspections