Casting vote and tax compensation: about Carf jurisprudence

The Legal Consultant article signed by the partners in the tax area of ​​Maneira Advogados, Dr. Daniel Serra Lima and Dr. Roberto Codorna Leite Pereira, which deals with the consequences of the casting vote system in CARF jurisprudence on tax compensation.

Quality vote and tax compensation: on Carf jurisprudence

July 21, 2022

By Daniel Batista Pereira Serra Lima and Roberto Codorna Leite Pereira

Since April 2020, with the publication of Law No. 13,988, taxpayers began to have, in their favor, the so-called tie-breaking vote (or “qualifying vote”) in judgments carried out within the scope of Carf (Administrative Council of Tax Appeals). This means that, in collegial decisions, the tie necessarily favors the taxpayer, and not the Tax Authorities, as was the case until then.

Law No. 13,988 included article 19-E in Law No. 10,522/2002 with the following statement: “In the event of a tie in the judgment of the administrative process of determining and demanding the tax credit, the casting vote referred to in §9 of article 25 of Decree No. 70,235, of March 6, 2002 does not apply. 1972, resolving in favor of the taxpayer”.

As we know, until the aforementioned legislative innovation, several controversial issues involving high-value tax credits were decided by the casting vote in favor of the Treasury. With the change in the system, the game tends to change: these controversies tend to be decided in favor of taxpayers.

Aware of this and unsatisfied, the National Treasury decided to act on different fronts:1) questioned the new tie-breaking system, which is still awaiting a final pronouncement from the Supreme Court [1]; 2) suspended, in the context of the Covid-19 health crisis, high-value judgments that could represent a significant defeat for the Federal Tax Authority; and 3) limited, via Ministerial Ordinance [2], the scope of the new criterion to assessments of tax credit, removing its application from cases in which tax credit is also discussed, but not constituted by ex officio assessment, as is the case with tax compensations. The object of compensation processes is the matching of accounts between the taxpayer's credits before the Tax Authorities and his debts (tax credits) before the Tax Authorities, the denial of which implies the demand for uncompensated debts.

Among the strategies adopted by the National Treasury, the third one arouses particular concern. The good science of Law values ​​the decision-making coherence of the courts in the exercise of their jurisdictional function, as a fundamental measure to ensure legal certainty, predictability and stability to the legal system [3]. Thus, despite the National Treasury's nonconformity with the new quality vote system, the restrictive interpretation of the scope of article 19-E of Law No. 10,522/2002 gives rise to distortions in the Carf jurisprudence.

Just imagine that, for the same topic, if there is a tie, the same Carf group could decide an issue favorably to the Tax Authorities or to the taxpayer, depending solely on the nature of the tax credit claim process: ex officio assessment or tax compensation.

In fact, there are several topics that can be the subject of proceedings arising from official assessment or tax compensation, without distinction. Currently, compensation processes occupy a large part of Carf's judgment agenda, and their relevance in federal tax administrative litigation is unquestionable. Especially, in the context of taxation by PIS and Cofins, there are several examples that can be cited.

Within the scope of the appropriation of PIS and Cofins credits, in the non-cumulative system of social contributions [4], it is common that, once the calculation period has ended, the taxpayer reviews his tax calculation and identifies expenses that could give rise to contribution credits, but which were not part of the original calculation.

Thus, in light of what was decided by the STJ in REsp nº 1.221.170/PR [5], in the repetitive system, the manager can understand that a certain expense corresponds to the concept of input pacified by the court and rectify his tax writing in relation to past periods in order to determine an undue amount subject to offset. In relation to future periods, this same manager may apply the criterion in the original calculation of social contributions, resulting in the collection of contributions in smaller amounts.

In this context, imagine that, on the tax basis that the expenses do not correspond to the concept of input, in relation to past periods, the compensations requested by the taxpayer are not approved by the tax authorities, and, in relation to future periods, the Federal Tax Authorities promotes the launch of the corresponding tax credit, through a tax assessment notice.

Once both demands have been challenged and taken to Carf, and there is a tie in both processes (compensation and ex officio assessment) regarding the qualification of expenses as inputs, there may be different results in the same specific case.

Once the issue is taken to the Superior Chamber of Carf, whose purpose is to standardize the body's jurisprudence, if there is also a tie, the issue may be decided in favor of the Tax Authorities or the taxpayer depending exclusively on the nature of the process (release or compensation). It does not seem reasonable to us that this is the decisive criterion of the judgment which, ultimately, represents Carf's final word on that topic.

On more specific topics, which could also be the subject of discussion in official release or compensation processes, it is now possible to verify a change in Carf's positioning solely due to the change in the casting vote.

This is the case, for example, of the discussion regarding the inclusion in the PIS and Cofins calculation base, incident to the cumulative system, of financial income arising from income from financial investments of assets guaranteeing provisions and technical reserves by insurers and reinsurers.

Without going into the merits of this controversial discussion, it is important to emphasize that, after the introduction of article 19-E in Law No. 10,522/2002, rulings were handed down by Carf in favor of the taxpayer using the tie-breaking vote in cases involving ex officio assessments [6]. The point is that, if it were a process resulting from tax compensation, the result would be diametrically opposite.

The new quality vote system, favorable to the taxpayer, is still a novelty and has not been extensively tested, especially due to the restrictions imposed on the judgments of high-value cases due to the pandemic context that has been observed, to a certain extent, to this day.

As lawyers and jurists, we are concerned about the consequences resulting from the excessively restrictive tax interpretation of article 19-E of Law No. 10,522/2002, which created different tiebreaker criteria, depending exclusively on the nature of the process. It seems to us that this is not an appropriate decision-making criterion to discriminate against taxpayers who, finding themselves in equivalent situations, bring the same issue to the jurisdiction of Carf, which is why we believe there is an offense against the principle of equality, in addition, of course, to making the decision-making system incoherent. The time has come to review this understanding and apply, uniformly, the same tiebreaker criteria, regardless of the nature of the tax credit claim process.

Notes
[1] The discussion is ongoing in ADIs No. 6,399, 6,403 and 6,415.
[2] Ordinance of the Ministry of Economy No. 260, of July 1, 2020.
[3] ÁVILA, Humberto. Legal Security Theory, 3rd ed. São Paulo: Malheiros, 2014, p. 350.
[4] Laws nº 10,637/2002 and 10,833/2003.
[5] STJ. REsp nº 1.221.170/PR, rapporteur minister Napoleão Nunes Maia, First Section, judged on 02/22/2018, DJe 04/24/2018).
[6] Ac. Carf No. 3201-009.552, designated editor Márcio Robson Costa, PTA No. 16682.722.324/2017-67, judged on 11/26/2021.

Daniel Batista Pereira Serra Lima has a doctorate and master's degree in Tax Law from the University of São Paulo (USP) and partner in the tax area at Maneira Advogados.

Roberto Codorniz Leite Pereira has a PhD in Tax Law from the Faculty of Law of the University of São Paulo (USP), a master of laws (LL.M.) in International Tax Law (International Tax Law) from the Wirtschaftsuniversität Wien (WU) and partner in the tax area at Maneira Lawyers.

Legal Consultant Magazine, July 21, 2022

https://www.conjur.com.br/2022-jul-21/limae-pereira-voto-qualidade-compensacao-tributaria