Zero Litigation: membership period ends this Friday (31) – 03/30/2023 – Market

The deadline for joining the Tax Litigation Reduction Program, also known as Zero Litigation, ends this Friday (31) at 7 pm. The program provides for the renegotiation of amounts charged by the Tax Authorities, from individuals and companies, with discounts and a period of up to 12 months for payment.

Lawyers reported great interest from companies in joining the program after an announcement made in January, but the payment terms, after the calculations were made, discouraged many taxpayers.

There is always the possibility of extending membership, but the assessment is that the strict rules and the short payment period may have compromised the success of the program.

The government estimates that it will obtain BRL 35 billion in extraordinary revenues and a permanent gain of BRL 15 billion from the reduction of conflicts.

Tax collections under discussion within the scope of the DRJ (Federal Revenue Judgment Offices), the Carf (Administrative Council of Tax Appeals) or small debts in administrative litigation or registered in overdue debt of the Union can be negotiated.

The Federal Revenue sent taxpayers information on which debts can be negotiated and the payment capacity of each litigant. With the data, it is possible to simulate, in a spreadsheet, the payment discount, in case of withdrawal from the process.

For individuals, micro and small companies, the discount will be 40% to 50% of the total amount of the debt, including the tax that originated the liability, in addition to interest and fine, for debts of up to 60 minimum wages (R$ 78,120).

For debts above 60 minimum wages, the discount is up to 100% on the amount of interest and fines, in the case of irrecoverable or difficult to recover amounts. The government will still allow the use of tax losses and a negative calculation base to settle 52% to 70% of the debt.

In all cases, the effective discount percentage will observe the taxpayer’s ability to pay.

The debts that fall into this category represent more than 30,000 processes at Carf, with a total value of more than R$720 million. At the Federal Revenue Police Stations, there are more than 170,000 processes, totaling almost R$ 1 billion, according to the Ministry of Finance.

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PRLF (Tax Litigation Reduction Program)

Who can join?
Individuals and companies with tax debts under discussion within the Judgment Offices of the Federal Revenue Service, the Administrative Council of Tax Appeals or low-value debts in administrative litigation or registered in overdue debt of the Federal Government

Term
From 8 am on February 1, 2023 to 7 pm on March 31, 2023

Accession
By opening a digital process on the e-CAC portal

Documents

• Membership application available in the e-CAC duly completed
• Proof of payment of the initial installment
• If applicable, certification issued by an accounting professional regarding the existence and regularity of credits arising from tax losses and negative CSLL calculation basis, in the form of a specific form available on e-CAC

Step by step

• The digital process must be opened by selecting the “Tax Transaction” option in the Service Concentration Area field, and then selecting the service “Transaction by Membership in the Tax Litigation Reduction Program – PRLF”;
• The taxpayer must adhere to the DTE (Electronic Tax Domicile) for implementation by the Revenue Service of an electronic address for sending communications;
• The submitted application for adhesion suspends the processing of tax administrative processes related to the debts included in the transaction while the application is under analysis;
• If documents are missing or incomplete, the taxpayer will be summoned to, within a period of ten days, correct the indicated failure

Extinction of litigation
The formalization of the transaction agreement constitutes the recognition by the taxpayer of the debts, with the extinction of the administrative dispute to which it refers

installment
Whichever payment method is chosen, the minimum installment amount will be BRL 100 for individuals, BRL 300 for micro or small businesses, and BRL 500 for other legal entities.

Correction
The value of each installment will be increased by interest equivalent to the Selic (basic interest rate), up to the month prior to the payment, and 1% for the month in which the payment is made.

Modalities
– With the use of PF/BCN (Tax Loss or CSLL Negative Calculation Base)

• Irrecoverable or difficult-to-recover tax credits: Reduction of up to 100% of interest and fines (limited to up to 65% of the total amount of the tax credit), a minimum of 30% of the outstanding balance in cash, in up to 9 installments, and the remainder with use of PF/BCN
• High or medium recovery tax credits: No reduction in interest and fines, with a minimum of 48% in cash in up to 9 installments, and the remainder with use of PF/BCN

– No use of Tax Losses or Negative Calculation Basis

• Down payment of 4% in up to 4 installments;
• Reduction of up to 100% of interest and fines (limited to up to 65% of the total amount) and the remainder in up to 2 installments; or
• Reduction of up to 100% of interest and fines (limited to up to 50% of the total amount) and the remainder in up to 8 installments.
• Discounts of 70% and 55%, respectively, for natural persons, micro-enterprises, small businesses, Santas Casas, cooperative societies and other civil society organizations (Law nº 13.019/2014) or educational institutions

Note: In any of the previous modalities, the discount will observe the taxpayer’s ability to pay

Debts of small value

For debts of up to 60 minimum wages (R$ 78,120), referring to individuals, micro and small companies, the discount will be 40% to 50% of the total debt, including the tax that originated the liability, in addition to interest and fine

Regardless of the payment capacity or debt classification, these credits may be negotiated upon payment, as a down payment, of 4% of the consolidated value of the transacted credits, in up to four monthly and successive installments

The rest will be paid:

• within two months, with a 50% reduction, including the principal amount of the credit; or
• in up to eight months, with a 40% reduction, including the principal amount of the credit

The discounts also apply to credits registered in the Union’s overdue debt for more than one year, through the PGFN’s Regulariza program (www.regularize.pgfn.gov.br)

Termination or opposition
Failure to pay the down payment in full implies the cancellation of the transaction request. Non-payment of three consecutive or alternate installments of the outstanding balance leads to termination of the transaction

Precatories
The program provides for the possibility of using net and certain credits owed by the Union, its municipalities and public foundations, own or acquired from third parties, resulting from final and unappealable decisions for discharge or amortization of the outstanding balance of the transaction

Source: Joint Ordinance RFB/PGFN No. 1, of 01/12/2023

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