STF will again judge the collection of income tax on alimony

The incidence of the IR (Income Tax) on child support will be judged again by the Federal Supreme Court (STF) between September 23 and 30, in the virtual plenary. Ministers must decide whether or not to accept the government’s arguments against the court’s judgment that dropped the levy of income tax on pensions.

On June 3, the STF ruled that the levy of the tax is unconstitutional. By 8 votes to 3, the court followed the understanding of the rapporteur of the ADI (Direct Action of Unconstitutionality), Minister Dias Toffoli. For him, alimony is not an increase in assets and should not be taxed and the collection, in the way it is done, configures double taxation.

The action was proposed by the IBDFam (Brazilian Institute of Family Law) in 2015. When contacted, the institution did not respond to questions in the report until the publication of this text.

In the motions for clarification presented by the AGU (Advocacy-General of the Union), which represents the government in court, there are four requests. Among them is the request for the court to modulate the effects of the decision, that is, to define from which moment the end of the collection should take effect.

For the AGU, it is necessary to wait for the final decision of the action, that is, for the process to come to an end. The fear is that, if this modulation does not take place, the Union will be obliged to pay amounts retroactive to the previous five years. The tax impact is estimated at R$ 6.5 billion.

The government also asks that only judicial pensions be exempt from tax and that those made official by public deed in a notary still have the discount. The argument is that the latter are more susceptible to what the government calls “dissimulation”, leading to tax evasion.

According to the AGU, if the STF maintains the scope of the decision, another 95,000 pensions recognized by public deeds will be covered, which will increase the federal tax waiver. If the decision is limited to judicial pensions, 807 thousand will be affected. The annual financial impact is R$ 1.05 billion.

A third request is for ministers to end the possibility of deducting the death pension from the Income Tax. Today, those who pay child support, ex-wife or ex-husband have an annual discount when filing the full tax model, resulting in a lower tax to be paid or a higher amount to be refunded.

The attorneys general of the Union understand that this rule should also be judged as unconstitutional, in what they called the omission of the ministers when analyzing the issue.

The fourth request is that only those who have taxable income of up to R$ 1,903.98 do not have to pay the Income Tax, as is done in the current rule.

Does the taxpayer have to pay IR on the pension?

Daniel de Paula, a tax specialist at the IOB, states that, although the STF has ruled the matter unconstitutional, the Federal Revenue has not yet published an ordinance guiding the payment or not of the Income Tax on alimony, and, therefore, the taxpayer is the one who decides whether or not to pay the tax.

“It’s a personal decision. The taxpayer assumes the risk until there is a modulation of the issue”, he says.

The IRS states that it “does not comment on rules or acts not yet published”.

Mariana Vito, partner of Trench Rossi Watanabe, says that one of the points questioned by the government would be unconstitutional, as it violates the principle of isonomy. “It doesn’t make any sense that people who dispute their pensions in court are entitled to the exemption and other people who do not dispute in court are not entitled,” she says.

Mariana also criticizes the government’s request to end the IR deduction. According to her, this point must be defined by a law passed by the Legislature.

The action was proposed by the IBDFam (Brazilian Institute of Family Law) in 2015. When contacted, the institution did not respond to questions in the report until the publication of this text.