Federal Revenue Service extends deadline for tax settlement

With recent amendments, the deadline is now set for March 31, 2023

On November 29, the Federal Revenue Service of Brazil (RFB) published two amendments to the tax settlement notices that had been enacted in September. The amendments extended the deadline for adhering to the tax settlement proposal of credits deemed irrecoverable or of small value that are under administrative litigation.

The deadline, which would have ended on November 30, 2022, has now been extended to March 31, 2023.

Tax settlement offers taxpayers the chance to settle their debts with the Special Federal Revenue Secretariat under more favorable conditions, which include a reduction in fines and interest rates and longer installment payment plans.

Check out below a few aspects of these tax settlement types:

Settlement of irrecoverable tax credits

(RFB Tax Settlement Notice No 1/2022)

Eligible for this transaction are tax credits deemed irrecoverable by the Revenue Service, which are those whose liquidity has been declared by an authority but are still under discussion at the administrative level. The following debts give rise to irrecoverable tax credits:

• those incurred over 10 years ago,
• those held by debtors who have gone bankrupt or are undergoing supervised or out-of-court reorganization or liquidation, or out-of-court intervention;
• those held by debtors whose status with the National Taxpayer Registry (CNPJ) appears as written off, unsuitable or suspended for non-existence of fact, on certain grounds.
• those held by deceased debtors.

Taxpayers can opt to settle their debts in several ways, one of which allows the down payment to be made in installments and the remainder to be paid in up to 120 installments.

Settlement of small-value credits

(RFB Tax Settlement Notice No 2/2022)

Intended for individuals and small businesses, this tax settlement type allows the negotiation of debts of up to 60 minimum wages, including both the principal amount and the corresponding fines. However, debts incurred under the Simplified Taxation System (Simples Nacional) are not covered.

Down payment can be made in installments and the remaining debt can be paid in up to 52 installments, depending on the option chosen.

Changes in the regulations

A few days prior to the extension of the deadlines, Ordinance No. 247/2022 was published, establishing new rules governing the procedures for settling debts with the Federal Revenue Service.

The new regulation did not introduce many new developments in comparison to the previous one, but laid out the review procedures capable of prompting administrative tax litigation and defined which matters are subject to relitigation. In this sense, in addition to the debts warranting Administrative Tax Proceedings (PAF), the following matters may be subject to tax settlement:

• unreported tax offset;
• schedule of assets and rights when the settlement concerns the substitution of collateral;
• cancellation or non-recognition of tax rectification; and
• installments in litigation prior to the taxpayer's exclusion.

Also of note is that the regulation prohibits tax settlements to take place while any administrative review or objection to claim is still pending. In addition, as of February 1, 2023, taxpayers must remain enrolled with the Electronic Tax Residence Registry (Domicílio Tributário Eletrônco - DTE) for the entire duration of the debt settlement.

The ordinance went into force on the date it was published (November 22), but with regard to simplified tax settlements for individuals, its provisions will only take effect as of January 1, 2023.

Specialized support

The tax team at Domingues e Pinho Contadores is all set to assist companies in implementing the regulations in force, in negotiating installment plans, and in following up on administrative proceedings. You can rely on our support: dpc@dpc.com.br.