Recently, the legislative power amended the wording of Article 174 of the National Tax Code (CTN), which deals with the prescription period for the collection of taxes owed by companies and individuals, including extrajudicial protest as a means of interrupting this period.
Prescription is a legal institute aimed at preventing obligations from extending indefinitely, promoting legal certainty by stipulating a period within which the Tax Authorities must collect tax debts.
If the period prescribed by law is exceeded (five-year rule), the Tax Authorities can no longer file a lawsuit to collect the debts from companies.
An interruptive cause, in turn, is an act that resets the elapsed prescription period to zero, restarting the countdown of the period.
Therefore, the legislative amendment that makes extrajudicial protest a means of interrupting the prescription period trivializes the function of prescription, potentially extending the period for debt collection beyond what is reasonable.
Although the measure aims to strengthen the Tax Authorities’ actions and their ability to recover unpaid taxes, it is essential to analyze its impacts from a critical perspective, considering the constitutional principles and the current legislation in Brazil.
Before the legislative amendment, the causes of interruption were more restricted and generally occurred during the course of a judicial collection action. However, the current wording of Article 174 of the CTN extends the available period for filing a Tax Enforcement, as in addition to the 5 years for the constitution of the tax credit and the 5 years to file the collection action (tax enforcement), it is now possible that as the prescription period approaches, the Tax Authorities can promote its interruption through extrajudicial protest, forcing the restart of the countdown, and certainly increasing the available period for the Tax Authorities to collect taxes.
In any case, the doubts regarding the effective period that the Tax Authorities will have to file collections, which are often completely illegal, point to the clear legal uncertainty that taxpayers will have to endure.
Despite this, it is important to emphasize that the aforementioned legislative amendment has ex nunc effect, that is, only future effects, since the principles provided in the Federal Constitution prohibit the retroactive application of rules that harm the parties, such as those that alter the prescription period.
Thus, in accordance with Article 105 of the National Tax Code, the new law cannot retroact to facts prior to its publication, due to the need to respect acquired rights and res judicata, principles provided for in the Federal Constitution, which aim to preserve the legal certainty of taxpayers.
It is essential that the legislator and the Judiciary act together to ensure legal certainty and balance between the need to collect active debt and the protection of taxpayers’ rights.
The absence of clear limits for extrajudicial protest and the possibility of divergent interpretations of the current legislation require an urgent review of the rule, in order to avoid the indefinite extension of the period for filing tax enforcements and to ensure the effective protection of legal certainty and other fundamental rights.