Tax lawyers know that recovering tax credits is an excellent market niche for tax law practice. Besides being a highly profitable area, this practice allows lawyers to discuss the most sophisticated tax arguments.

Generally speaking, it is known that every person, whether an individual or a legal entity, is subject to tax obligations. Taxes, in turn, can be federal, state, or municipal in nature.

However, if the State makes a "higher" or "undue" charge for any tax obligation, the taxpayer may request the recovery of the tax credits.

This is a market niche that undoubtedly allows lawyers specializing in Tax Law to build a solid career, given the numerous unique aspects of studying tax law.

How to claim tax credit recovery?

In practice, the recovery of tax credits can occur in two spheres, both administratively and judicially.

Generally, requests for tax credit recovery should be made through administrative channels. This is because the tax authorities will then be aware that they have made improper tax collections. At this stage, there are two possible responses:

The tax authorities accept the taxpayer's request for a refund of the amounts paid and approve the administrative request.

The tax authorities disagree with the administrative request and reject it.

With the rejection, the lawyer may resort to legal action to request the recovery of tax credits.

Tax litigation in Brazil

If an administrative request for the refund of tax credits is denied, the lawyer may seek legal action to recover these amounts.

It is worth mentioning that tax litigation is immense in our country, occupying a large part of the judicial demands involving the Public Administration. In 2022, the National Council of Justice released the research report " The Effectiveness of Brazilian Tax Litigation ".

In general terms, the aim of the research was to identify how dispute resolution in the tax area could be improved, seeking to enhance the provision of judicial services in accordance with the constitutional principles of speed, reasonable duration of proceedings, adversarial process, and full defense.

If you wish to specialize in Tax Law, you should be familiar with, for example, in addition to the legal theories and norms surrounding the subject, these research methods, which help legal professionals make decisions when handling their clients' requests.

Requirements for recovering tax credits in court.

It is known that, in order to litigate in court, a party must demonstrate standing to sue and procedural interest ( article 17, caput, of the Code of Civil Procedure ).

In the case of tax credit recovery, the legitimacy to dispute tax claims in court depends, first and foremost, on whether there is a legal tax relationship between the party bringing the action and the public entity being sued.

Given the existence of a tax legal relationship, there is consequently standing to discuss aspects of that same relationship, thus fulfilling the first requirement of Article 17 of the CPC.

The second requirement, namely, procedural interest, in the case of an action for recovery of undue payment, consists of knowing who actually made the payment of the tax whose restitution is being sought.

Since the taxpayer who made the undue payment is the one liable for the tax obligation, their standing to sue is confirmed, and they may file a lawsuit.

It is worth mentioning that the study of tax law goes hand in hand with the study of civil procedural law, because the rules of tax law are rules of substantive law.

In turn, the tax process is governed by procedural law rules, making the study of both disciplines indispensable.

The deadline for recovering tax credits

In general terms, the taxpayer's right to a refund of taxes paid unduly is a right to a benefit, so the rules provided for in the statute of limitations apply.

Article 168 of the National Tax Code stipulates that the right to claim a refund of taxes paid unduly expires after a period of five years.

This deadline, according to the CTN, can be counted as follows:

both from the date of extinction of the tax credit;

from the date on which the administrative or judicial decision that amends, annuls, or rescinds a conviction becomes final.

The initial petition for the recovery of tax credits.

Here, dialogue between tax law and civil procedure is indispensable!

This is because the initial petition in a tax credit recovery action is a declaratory action, following the ordinary procedure, and must therefore meet the requirements set forth in Article 319 of the Code of Civil Procedure.

The request to be made in the initial petition is for the defendant public entity (whether federal, state, or municipal) to be ordered to reimburse the amount unduly paid, plus applicable interest.

Upon receiving the initial petition, the Judge will order the defendant to be summoned to contest the action, if desired. The defense will establish the disputed and undisputed facts, and, depending on the case, a summary judgment may be rendered.

The early judgment of the process in the recovery of tax credits.

The Code of Civil Procedure allows for the early judgment of the case (article 355 and its subsections), and these rules, in turn, apply to tax litigation.

Therefore, if there is no evidence to be produced, either because there is no dispute regarding the facts, or because the existing dispute can be resolved through documents already attached to the case file, the judge may proceed with an early judgment on the merits, pursuant to Article 355 of the Brazilian Code of Civil Procedure (CPC/2015).

It is worth mentioning that, when judging the merits of the case, the Judge will be issuing a sentence, based on exhaustive cognition. If there are no appeals and the judgment becomes final, a judicial enforcement order is formed, to be executed in compliance with the judgment or through tax compensation.

How do I receive tax credits?

With a court order for enforcement, the taxpayer can request the execution of the judgment (with the issuance of a payment order) or tax compensation.

In this regard, there is a summary issued by the Superior Court of Justice: "The taxpayer may choose to receive, through a court order or by compensation, the tax overpayment certified by a declaratory judgment that has become final" ( Summary 461/STJ ).

Tax compensation, for example, can occur through administrative channels, when the taxpayer registers their credit with the tax authorities. On the GOV website, for example, it is possible to find an area dedicated exclusively to tax compensation.

When requesting tax compensation through administrative means, taxpayers must adhere to the rules set forth in Brazilian Federal Revenue Service Normative Instruction No. 2055.

Deepen your studies in Tax Law!

As you have seen, it is possible to recover tax credits, both through judicial and administrative means. This work, if carried out with legal expertise and in-depth knowledge of the area, can establish the lawyer as an authority on the subject.

Therefore, a specialization in tax law is essential for your professional development.

With IDP's specialization offering online (and even better, live) classes, for example, you will be able to do thorough reading on complex tax law topics and get answers to your questions from professors who are experts in tax credit recovery.

Specialization in Tax Law 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.