Revenue begins debt negotiation with discounts to debtors on September 1

The Federal Revenue published this Friday (12) an ordinance that will facilitate the negotiation of up to R$ 1.4 trillion in debts of taxpayers with the tax authorities, with the possibility of discounts and installments.

As of September 1st of this year, debtors will be able to present to the IRS their proposals for negotiation of debts that are still in the administrative phase of collection, that is, they are not under judicial challenge.

The body may also suggest agreements with taxpayers, or even issue public notices with pre-established conditions for interested parties to join.

The so-called tax transaction is an instrument created in 2020 to expand the forms of negotiation between the Union and its taxpayers. In the beginning, the tool was operated by the PGFN (Attorney General’s Office of the National Treasury), with only a few exceptions for the Internal Revenue Service.

In June of this year, President Jair Bolsonaro (PL) sanctioned a law that authorized the Federal Revenue to use the tool more widely. The change was articulated directly by the special secretary of the agency, Julio Cesar Vieira Gomes, in an arm wrestling match with the government’s legal department.

The measure became a “guideline” of the secretary, contradicting the historical position of the Tax Authorities of being against debt refinancing programs for considering a premium to bad debtors, as shown by the Sheet.

In the transaction, taxpayers can obtain a discount of up to 65% of the debt and pay the balance within 120 months. For micro and small companies, the rebate percentage can reach 70%, and the term, 145 months.

The size of the benefit will depend on an analysis by the IRS of the taxpayer’s ability to pay. Those in greater difficulty will have more benevolent concessions.

In the most recent change, the law also included the possibility of paying off up to 70% of the remaining amount (after discounts) with tax loss credits or negative calculation basis, which reduces the amount actually paid.

This benefit can be used by any taxpayer, regardless of the debt situation, but it will be subject to an audit by the Federal Revenue Service to verify if the credit values ​​were calculated correctly.

According to the rules published by the Revenue, the individual proposal may be presented by taxpayers who owe more than R$ 10 million within the scope of the Tax Authorities. Applications for agreement will begin to be received from next month.

Companies in bankruptcy, reorganization or judicial or extrajudicial liquidation, those under extrajudicial intervention, as well as autarchies, foundations, federal public companies, state and municipal governments and their respective entities may also propose negotiation.

As of January 1, 2023, those who owe between R$1 million and R$10 million to the Revenue will also have access to trading through a specific modality, the so-called simplified individual transaction.

Previously existing agreement modalities, such as the transaction for small-value litigation (up to 60 minimum wages, or R$ 72,700), are still valid. A new public notice for negotiation in this category should be published in August.

as showed the Sheet in July, when negotiating the expansion of the tax transaction within the scope of the Revenue, Gomes wanted ample power to carry out agreements at any stage of collection at the Tax Authorities.

The proposal generated a strong reaction within the economy, and a lock was set: the transaction can only include debts in administrative litigation, that is, that are the subject of some litigation.

However, the regulation of the Revenue made a broad interpretation of the law, based on the presumption that the taxpayer targeted by the agency tends to contest the charge, initiating the battle.

To avoid the costs involved in the dispute, the Tax Authorities decided to allow the beginning of the transaction already within the deadlines for the dispute of the debt. In practice, any taxpayer assessed by the IRS can go directly to the agreement.

Since the approval of the new negotiation modality, the Tax Authorities have sought to distance the transaction from the Refis programs launched in the past and which granted general benefits, regardless of the taxpayer’s financial situation.

One of the arguments is that the tax transaction centralizes discounts on individuals and companies that prove their low ability to pay.

In addition, there is an internal assessment that the agreements will increase federal revenue – without harming the normal collection of taxes, as was the case with Refis, which encouraged default in anticipation of a new program. However, some technicians at the agency are still critical of the model.

SEE THE MODALITIES OF TRADING WITH THE REVENUE

How does the tax transaction work?

The transaction is a negotiation of tax debts, with the possibility of discounts and installments according to the taxpayer’s ability to pay and the guarantees involved.

There are different modalities:

• By individual proposal, presented by the debtor
• By adherence to proposals with specific conditions launched by bodies such as PGFN or Revenue
• By adhesion, in the case of small tax litigation (up to 60 minimum wages)

Who can submit a negotiation proposal?

The Federal Revenue will admit the submission of individual proposals for settlement involving debts in administrative litigation or within the period of administrative claims, appeals and other petitions. In practice, any taxpayer subject to inspection by the agency can negotiate.

As of September 1, individual proposals can be submitted:

• Taxpayers who owe more than BRL 10 million
• Companies in bankruptcy, reorganization or judicial or extrajudicial liquidation
• Companies under extrajudicial intervention
• Authorities, foundations, public companies, as well as states, municipalities and their entities

As of January 1, 2023, you will be able to submit individual bids through the simplified transaction:

• Taxpayers who owe between R$1 million and R$10 million

What are the conditions?

• Discount of up to 65% on the total, up to the limit of the original debt amount, according to payment capacity. In practice, some taxpayers may end up having full exemption from interest and penalties. Maximum percentage rises to 70% in the case of MEI (individual microentrepreneur) and micro and small companies
• Term of up to 120 months to pay off the remaining balance, or 145 months in the case of MEI, micro and small companies
• Possibility of using tax loss credits and negative CSLL tax base to pay off up to 70% of the remaining balance, after discounts
• Possibility of using precatories or offering guarantees

Will the IRS also be able to offer agreements with taxpayers?

Yes, the taxpayer may be notified by the Tax Authorities about the existence of the debt, presumed ability to pay, list of tax credits eligible for the transaction, estimated discount amounts, payment terms and deadline for acceptance of the proposal.

The IRS can also issue public notices for negotiation under pre-established conditions, for the adhesion of interested parties.