Class action lawsuits have gained prominence in the Brazilian tax landscape as effective tools for defending the diffuse, collective, and homogeneous individual rights of taxpayers. 

With the increasing complexity of the relationship between tax authorities and society, understanding how and when to use this procedural tool has become essential for professionals working in the field. 

This article addresses the main characteristics, grounds for admissibility, and challenges related to class action lawsuits in tax matters, highlighting their importance for the effectiveness of tax justice and the protection of taxpayers.

What are class action lawsuits and why are they important?

Class actions are procedural instruments that allow the defense of the interests of a group of people in a single legal claim. In the context of tax law, these actions aim to protect taxpayers against abusive or illegal tax practices by the State, preventing the multiplication of individual lawsuits on the same dispute.

The legal provisions for this type of action are scattered across various normative instruments, such as the Federal Constitution (art. 5, XXXV, XXI and LXX), the Consumer Protection Code (art. 81 et seq.), the Public Civil Action Law (Law No. 7.347/1985) and the Popular Action Law (Law No. 4.717/1965), which are supplementarily applicable to the tax field.

The 1988 Constitution clearly enshrines the principle of effective judicial protection by ensuring that " the law shall not exclude from the consideration of the Judiciary any injury or threat to a right " (Article 5, XXXV). Thus, collective actions are consolidated as important procedural guarantees aimed at protecting tax rights threatened or violated by acts of public authorities.

Thus, collective actions in tax matters have the power to guarantee respect for tax legality, preventing undue, unconstitutional, or abusive charges. Through these actions, it is possible to discuss the validity of taxes, the interpretation of tax regulations, or the restitution of overpaid amounts, always with effects that go beyond the limits of a single person, balancing the relationship between the tax authorities and the taxpayer. 

Those entitled to bring class action tax lawsuits

In the context of tax law, the filing of class action lawsuits is reserved for certain authorized parties, as established by Brazilian legislation. The Federal Constitution, in its article 5, item XXI, and Law No. 7.347/1985, which governs public civil actions, outline who has standing to defend collective interests in court.

Entities such as the Union, the States, the Federal District, the Municipalities, autonomous agencies, public companies, foundations, and mixed-economy companies may propose collective actions, provided that the subject matter of the claim is related to their institutional purposes. Furthermore, legally constituted civil associations that have been in existence for at least one year and whose purposes include the defense of collective interests are also entitled to bring such actions, according to Article 5, item V, of Law No. 7.347/1985.

Trade unions, in turn, have standing to legally represent the collective or homogeneous individual interests of their members, especially in matters involving the professional or economic category they represent, according to Article 8, item III, of the Federal Constitution.

Furthermore, it is important to highlight that the Public Prosecutor's Office does not have standing to bring a public civil action to challenge the constitutionality or legality of taxes in defense of taxpayers. The Superior Court of Justice has established this understanding, emphasizing that such claims must be brought by the specific entities authorized by law.

Grounds for filing class tax actions

Collective actions in tax matters are appropriate when there is a need to protect the transindividual rights or interests of taxpayers, especially in the face of tax practices that collectively affect a category or group. These actions aim to avoid multiple individual lawsuits on the same tax dispute, promoting procedural economy and uniformity of judicial decisions.

Among the most common grounds for admissibility are:

• Improper tax collection: When the tax authorities demand taxes in a manner contrary to current legislation, affecting a specific group of taxpayers;
  
• Illegal increase in tax rates: Changes to tax rates without observing the constitutional principles of legality and prior notice.
  
• Unconstitutionality of tax regulations: questioning laws or regulations that establish or modify taxes in violation of the Federal Constitution.
  
• Refund of amounts paid incorrectly.: seeking the return of taxes improperly collected from a group of taxpayers.

Effects of judgment and res judicata in collective tax actions.

Collective actions in tax matters produce effects that transcend the limits of the parties directly involved in the process. The judgment rendered in such actions can benefit all members of the represented collective, provided that the established legal criteria are observed.

According to Article 103 of the Consumer Protection Code (CDC), the effects of a collective judgment can be erga omnes , that is, extend to all members of the collectivity, group, category, or class, in cases where the claim is successful. However, this effectiveness is conditional upon the nature of the protected right and the adequate representation of the party entitled to bring the action.

In the tax context, the subjective limits of res judicata are frequently discussed. The Superior Court of Justice (STJ) has held that, in collective actions dealing with homogeneous individual rights, res judicata benefits all those represented, even if they were not named in the initial complaint, provided that the plaintiff entity has standing to represent them.

Furthermore, it should be mentioned that if the taxpayer files an individual lawsuit with the same subject matter as the collective action, without requesting the suspension of the individual proceedings within the legal timeframe, it is considered that there has been a tacit waiver of the effects of the collective res judicata. Thus, the collective judgment, when successful, can be enforced individually by the beneficiaries, respecting the objective and subjective limits defined in the decision. 

Main challenges and current discussions on the topic.

Collective actions in tax law are effective instruments for expanding access to justice, standardizing decisions, and promoting procedural economy, benefiting groups of taxpayers facing abusive tax practices. However, they face significant challenges, such as the lack of specific regulations for the enforcement of collective judgments, which generates legal uncertainty and hinders the realization of recognized rights. 

Identifying and qualifying beneficiaries, especially in cases involving a large number of people, also proves to be complex and costly. To overcome these difficulties, legislative improvement is essential, with the creation of clear rules regulating the stages of collective tax action, from filing to execution. 

Furthermore, the use of technologies, such as digital platforms for case management and integrated databases, can facilitate communication with beneficiaries and streamline procedures, preventing, for example, the filing of repeated enforcement actions, thus strengthening this instrument of collective redress.

The closing thought

Class action lawsuits represent an important avenue for controlling tax legality and protecting taxpayers' rights against undue tax demands. However, their use requires technical preparation and in-depth knowledge of applicable legislation and case law. 
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References 

BRAZIL. Constitution of the Federative Republic of Brazil of 1988. Brasília, DF: Presidency of the Republic. Available at: https://www.planalto.gov.br/ccivil_03/constituicao/constituicao.htm.

BRAZIL. Law No. 8.078, of September 11, 1990. Provides for consumer protection and other measures. Brasília, DF: Presidency of the Republic. Available at: https://www.planalto.gov.br/ccivil_03/leis/l8078compilado.htm.

BRAZIL. Law No. 7.347, of July 24, 1985. Regulates public civil action for liability for damages caused to the environment, to consumers, and to goods and rights of artistic, aesthetic, historical, touristic, and landscape value. Brasília, DF: Presidency of the Republic. Available at: https://www.planalto.gov.br/ccivil_03/leis/L7347Compilada.htm.

GRIECO, Nicole. Collective Actions in Tax Matters. São Paulo, 2020.

Brazilian Institute of Tax Studies (IBET). Superior Court of Justice (STJ). First Panel. Collective action. Enforcement of judgment. Absence of subjective limitation. Erga omnes effect. Public servant not expressly listed in the union's membership list when the collective action was filed. Admissibility. Available at: https://www.ibet.com.br/stj-1a-turma-acao-coletiva-cumprimento-de-sentenca-ausencia-de-limitacao-subjetiva-efeito-erga-omnes-servidor-que-nao-constava-expressamente-na-relacao-de-filiados-ao-sindicato-quando-da-proposi/.

MENDES, Gilmar Ferreira; BRANCO, Paulo Gustavo Gonet. Course on Constitutional Law. 19th ed. São Paulo: Saraiva Jur, 2024. E-book. (1 online resource). (IDP). ISBN 9786553629417. Available at: https://integrada.minhabiblioteca.com.br/books/9786553629417.

COURT OF JUSTICE OF THE FEDERAL DISTRICT AND TERRITORIES (TJDFT). Effects of the judgment in collective actions. January 25, 2024. Available at: http://tjdft.jus.br/consultas/jurisprudencia/jurisprudencia-em-temas/cdc-na-visao-do-tjdft-1/a-defesa-do-consumidor-em-juizo/os-efeitos-da-sentenca-nas-acoes-coletivas.