Tax appeals court maintains tie-breaking vote
An Economy Ministry ordinance reduced the effect of a law that Congress passed in April to extinguish the tie-breaking vote at the Administrative Council of Tax Appeals (CARF). The tribunal that reviews tax fines imposed by the Federal Revenue has been interpreting that the new law only applies to some cases, and last Friday this view was endorsed by a norm to regulate the declaration of judgment results when there is tie.
This more restrictive interpretation of the law frustrates the expectations of businesses, which have already lost disputes of billions of reais because of the tie-break criterion, based on the so-called quality vote.
The quality vote is bad for taxpayers because even though the CARF is formed by the same number of government and taxpayer representatives, it is the president of the judging panel, always a government representative, who casts the tie-breaking vote.
With Law no. 13,988, of April, this logic was inverted. A new article, 19-E, was included in Law no. 10,522, establishing that in case of tie the decision would be in favor of the taxpayer. Yet the text of 19-E has been giving margin to different interpretations.
This became more evident with the resumption of hearings of the ordinary CARF panels in June. Article 19-E frees from quality vote the "administrative proceeding for determination and requirement of tax credit." The CARF says that this would only be a portion of the proceedings judged in the tribunal: those coming from notices of infraction.
This means the quality vote can still be applied in judgments of motions for clarification and others of procedural nature. It's cases in which the judges evaluate whether the appeal filed by the taxpayer is in accordance with the regiment to then vote on its merit.
Yet the most serious, lawyers say, is that the quality vote is also being maintained for disputes related to compensation (payment of tax with tax credit) and requests for refund and reimbursement of amounts taxpayers paid in excess to the government.
"The volume of proceedings related to compensation and refund is large and much representative for taxpayers," says Julio Janolio, partner of law firm Vinhas & Redeschi. Practically all large companies, he says, dispute credits of social contributions PIS and Cofins, for example, and related to income tax and Social Contribution over Net Profit (CSLL).
There already are dozens of cases related to these issues decided by quality vote at the CARF panels. All...
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