We know that the day-to-day work in tax law demands that professionals, whether in litigation or consulting, have in-depth knowledge of the issues involving tax law and tax theories.

If you follow the IDP Online blog, you'll certainly know that we've already published an article about the main market niches in tax law . There we discussed tax consulting, litigation financing, tax planning, and tax litigation, the subject of this article.

In this article, we will unveil a little more about the day-to-day work in tax law, especially tax litigation, an area of ​​great profitability for tax lawyers.

What is tax litigation?

Before discussing tax law in practice, it's important to briefly present—for those who may not be familiar with the subject—a basic concept of tax litigation.

In general terms, tax litigation seeks the annulment, or at least the mitigation, of measures imposed by the State on the taxpayer, and can occur either in the administrative sphere (through the tax administrative process) or in the judicial sphere.

In the administrative sphere, upon discovering that they are paying a tax (or fine) incorrectly, the taxpayer files an appeal or challenges the charge. This process guarantees the right to a fair hearing and full defense. However, such appeals are not always successful, leaving the taxpayer with no alternative but to file a lawsuit.

The judicial sphere, in turn, is a new area of ​​discussion regarding that tax, making use, in addition to the legal tools of substantive law, of the guarantees provided for in the Code of Civil Procedure.

It is important to mention that we can divide tax litigation lawsuits into two types, namely, (i) those filed by the tax authorities against the taxpayer, and (ii) those filed by the taxpayer against the tax authorities. 

Tax litigation initiated by the tax authorities.

In tax litigation proceedings initiated by the tax authorities, we can mention two applicable modalities: tax enforcement proceedings and tax precautionary measures.

In general terms, tax enforcement is nothing more than an execution process for a specific sum of money, based on an extrajudicial title, where the aim is to obtain executive judicial protection.

In truth, what is sought is not "legal protection," but rather protection of a substantive nature, since the right is already established, but has not been fulfilled, and this is represented by the enforceable instrument, which is the Certificate of Outstanding Debt.

It is worth mentioning that the tax enforcement procedure is provided for in Law 6.830/80, and must also comply with the rules contained in the CPC (Code of Civil Procedure); it is, therefore, a dialogue between sources.

Next, the other type of tax action initiated by the tax authorities are precautionary tax measures, a type of action rarely used by the tax authorities.

Tax precautionary measures are a way in which the tax authorities seek to ensure the payment of an assessed tax debt, or the effectiveness of the enforcement of that same debt.

In these cases, the Public Treasury requests the freezing of the assets of the liable party, that is, the taxpayer, so that they cannot use illicit means to avoid paying the Public Treasury's debt, such as placing their assets in the name of third parties.

As you can see, in neither case (tax enforcement or precautionary tax proceedings) is there any mention of declaratory judgment, since the CDA (Certificate of Active Debt) enjoys presumption of certainty, having the effect of pre-established proof, under the terms of article 204 of the National Tax Code.

Tax litigation initiated by the taxpayer.

Here, unlike in cases of tax litigation initiated by the tax authorities, what the taxpayer generally seeks is a declaratory judgment, both to defend themselves against the tax authorities (as is the case with the Tax Debtor's Objections), and to have a right recognized (for example, in a declaratory action or an action for recovery of undue payment).

It is worth mentioning that this article cannot thoroughly examine all types of tax litigation actions, so we will analyze the main ones.

Objections by the Defendant

If the tax authorities can pursue a taxpayer who is allegedly in default, the taxpayer has the right to defend themselves, and they will do so through the Defendant's Objections.

In general terms, the purpose of the Defendant's Objections is to invalidate, in whole or in part, the enforceable instrument (CDA), and, consequently, to obtain the termination of the enforcement proceedings.

In the initial petition of the Defendant's Objections, certain information is indispensable for processing the claim. 

(1) the court to which it is addressed; 

(2) the name, qualification and address of the objector and the objected party; 

(3) the facts and legal grounds for the request; 

(4) the application, with its specifications; 

(5) the value of the case; 

(6) and the evidence with which the appellant intends to demonstrate the veracity of his statements regarding the facts. 

Upon receiving the objections, the judge will order the plaintiff to be notified so that, within 30 days, if desired, they may contest the debtor's objections.

Action to annul assessment

Another very common action in forensic practice is the action to annul an assessment, which, broadly speaking, aims to declare the tax assessment null and void.

This nullity may relate to the non-existence of the tax obligation, the incompetence of the tax authority, or even flaws in the administrative procedure or process, among other reasons.

In legal practice, to suspend the enforceability of a tax debt whose assessment is sought to be annulled, the plaintiff may request the granting of provisional urgent relief, pursuant to Article 300 of the Brazilian Code of Civil Procedure of 2015.

To that end, it must prove the likelihood of the right and the danger of harm or the risk to the useful outcome of the process.

It is also possible to request the suspension of the enforceability of the tax credit, through the deposit of the full amounts of the tax credit, a modality that is heavily criticized by legal scholars (art. 151, II, CTN).

Action for recovery of undue payment 

A claim for recovery of undue payment can be filed when the State makes a "larger" or "undue" charge for a tax obligation, giving rise to the possibility for the taxpayer to recover the tax credits.

To delve deeper into this topic, I recommend reading my article on Tax Credit Recovery , here on the IDP Online blog. In it, I discuss the requirements for the initial petition, the timeframe for recovering unduly paid tax credits, among other issues.

Other actions in tax litigation

In fact, there are other day-to-day actions in tax litigation, such as writs of mandamus, payment by consignment, and attorney's fees, among others, which we wouldn't have time to delve into in a blog post.

Therefore, your homework is to improve your studies in Tax Law! 

As you have seen, there are many interesting issues to be studied when it comes to tax litigation (whether through administrative or judicial channels).

Furthermore, when the work is carried out with legal expertise and in-depth knowledge of the subject, you can become an authoritative lawyer in Tax Law. 

Therefore, a specialization in tax law is essential for your professional development. With a specialization that includes online (and even better, live) classes, for example, you will be able to do thorough reading on complex tax law topics and have your questions answered by professors who are experts in tax credit recovery. 

I often say that specialization is the gateway to establishing authority in tax litigation. With it, you can work in large firms, prepare legal opinions in highly complex cases, and become a leading figure in the legal profession. 

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