What is a tax liability record challenge?
Translation of Brazil’s Federal Tax Dept. Text
Challenge [impugnação] is a petition whereby taxpayers contest a tax liability record [lançamento] in their name by the authority.
A challenging procedure entered in due time by the passive subject starts the administrative procedure that constitutes one of the forms for [seeking] to alter/cancel a regularly notified tax liability.
A challenge should contain:
- an identification by the judging authority to whom it is addressed – DRJ (Delegacias da Receita Federal do Brasil de Julgamento / Federal Income Tax Judgment Office);
- qualification of the challenge;
- the factual or legal motivations it is based on, the disagreement points and the reasons and evidences there may be;
- the measures the challenger expects be taken, with the reasons justifying them, and the formulation of request items concerning the desired surveys, as well as, in case of an expert work [in case an expert hired by the challenger has issued a report] the name, address and professional qualifications of his expert. A request for diligence or expert procedure shall be deemed not made should it fail to comply with the above requirements;
- the passive subject’s or his legal attorney’s signature;
In addition to a challenge, once the [tax department’s] demand has been formalized via a noncompliance record [auto de infração] or notication of tax liability record [notificação de lançamento], there are two possibilities:
- compliance by the passive subject with the demand, by settlement of the debt or by a request to pay it in installments;
- contumacy (absence of contestation; failure to attend, or delayed attendance by the passive subject);
For debt settlements and requests for paying in installments, reduction benefits shall be applied to ex-officio penalties, of 50% and 40% correspondingly.
Once the administrative litigation has started, the taxpayer will be entitled to make the extrajudicial deposit (Documento de Depósito Judicial – DJE), to the full amount (without reduction of ex-officio penalty), to protect himself against a debt increase due to moratory interests.
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