Tax Offenses and Penalties: Understanding State’s Punitive Powers

Posted on Dec 12, 2024 in Law & Jurisprudence

Item 23: Tax Infringement, Taxes, and Penalties

Introduction: The *Ius Puniendi* of the State

The breach of the duty to contribute becomes one of the most socially reprehensible behaviors, so that the legislature must articulate the appropriate place in the definition of illegal tax and the reaction against them in the form of administrative sanctions or penalties. Ius puniendi of the state is a necessary attribute of the same in that there are preventive and repressive formulas designed to prevent evasion of the rules. Sanctions law is, in the first place, criminal law but also administrative and penal law; in this case, punitive tax law. The branches of one tree. The Constitutional Court had to remember that the principles underlying the penal legislation apply, with certain nuances, to administrative law sanctions, since both are manifestations of the punitive system of the state and sanctioning powers should be a legal monopoly and could not be never in the hands of the government.

Principles of Sanctioning Powers

  • Principle of Legality: Nobody may be convicted or sentenced for actions or omissions which, when committed, did not constitute a crime, misdemeanor, or administrative offense under the laws then in force. Not specifically dealt with by the law can only define the scope of tax violations and penalties.
  • Retroactivity Principle: Rules governing the procedure of tax violations and penalties and surcharges have a retroactive effect in respect of acts which are not binding when its implementation is more favorable to the applicant.
  • Principle of Criminality: The effective realization of this principle requires not only that the offenses and penalties are provided by a previous law, but that such law may determine with sufficient precision, on one side, the contours and limits of punishable acts, i.e. the unlawful behavior that they are clearly defined, and, secondly, the content of the sanction, if any, will be applicable.
  • Principle of Accountability: It is established that only acts constituting infringement by administrative and legal persons that are responsible for them can be sanctioned, even if disregarding simple title; however, the element of willfulness, the element, manslaughter, must still be present when determining whether or not a tax offense exists.
  • Principle of Proportionality: In the current regulation of tax penalties, there will necessarily be proportionality between the punishment and the seriousness of the offense. And that means that there are specific criteria for grading the tax penalties.
  • Statute of Limitations: The period prescribed by law. Only in cases where laws have not set the limitation period governing that very serious infringements are barred after three years, serious after two years, and light after six months. The sanctions are barred: the very serious after three years, the grave after two years, and those imposed for minor offenses each year. On taxation applies, however, to impose sanctions, the limitation period of four years.
  • Principle of *Ne Bis in Idem*: The principle says that facts cannot be punished already by criminal or administrative sanctions in cases where the identity of the subject, act, and foundation is appreciated. *Non bis in idem* is not borne by duplication of administrative and penal sanctions in cases where assessing the subject’s identity, made without foundation and existence of a relationship of special supremacy of the Administration.

Concept and Characteristics of the Tax Offense

Legal Definition and Legal Concept

Tax infringements are acts or omissions in any fraudulent or culpable degree of negligence that are classified and penalized as such in the laws. The positive characteristics of the offense are the action, the illegality, the criminality, and culpability. The negative characteristics are called defenses.

Action

The design of the offense as a violation of tax legislation requires, as a first condition thereof, that attends human behavior or action. The act of infringement may be a doing something (action, strictly speaking), in not doing something (default) or a combination of both possibilities (commission by default). In every action, there is necessarily an individual who performs it: a human person. It has traditionally supported the capacity of legal persons to be held liable for direct infringement, but in reality, any infringement is always committed by one or more persons. Violators will be subject, “The taxpayers and taxpayers substitutes. “The retainers and forced to practice revenue account. “The obligation to comply with tax obligations formal-dominant society in the tax consolidation regime. “The institutions which are obliged to allocate income to partners or members. -The legal representative of the entities that lack the capacity to act in the tax system. The LGT provides for joint and several liability for persons who are causing or collaborate actively in the implementation of a tax offense (including the penalty in its area of responsibility) extending liability for penalties to successors in the ownership or exercise of holdings or economic activities if they have not applied for certification and details of debts and tax liabilities sanctions. The LGT declares the vicarious liability of managers of fact or law of legal persons, having committed these offenses tax, had not implemented the necessary acts that are of concern for compliance with tax obligations and duties, had consented to the Failure by those under their jurisdiction or had adopted agreements that allow violations.

The Illegality

Illegality means the legal setback. Any tax infringement is in violation of a ban or a mandate imposed by tax legislation. It involves a confrontation between the act done and what the tax law intended to undertake. In some cases, one cannot decide whether conduct is unlawful or not solely based on a comparison between what really happened and what the law meant to happen. They must then take into account the subjective elements of the unjust. In the Criminal Code, exculpatory factors are mainly contained in Article twenty: self-defense, necessity, and insurmountable fear of duty. If the declarant exposes all data and factors which it believes must be taken into account payable base to quantify and obtain a quota, such behavior cannot be described as constituting a violation. The completeness and accuracy eliminates malice and the discrepancy between the governments and citizens in a debate whose last word is ours, and never the subject of any asset or liability of the legal relationship.

The Typical

For unlawful conduct to constitute a breach, tax needs to be typical, i.e. to fit any infringement of the figures provided in GTL, the criminality is not a separate element of the illegality, but just one of its requirements. The effective realization of this principle requires not only that the offenses which are provided by a previous law, but also that such law shall determine with sufficient precision the contours and boundaries of punishable acts, namely the unlawful behavior that they are clearly defined.

Guilt

It is a wrong attributed to its author. Culpable acts that could refrain from action typically unlawful. Two determinants of disciplinary proceedings are: “The concealment of data to the tax authorities -The use of fraudulent means. There is concealment of data to the tax authorities where there are no statements or statements submitted for inclusion in the facts or transactions with missing or false amounts, or to omit the whole or part operations, receipts, income, products, goods or other data that affects the determination of tax liability, provided that the incidence of the debt arising from the concealment is more than 10 per 100. Fraudulent means are: a) substantial anomalies in the accounts and books or records required by tax law. Substantial anomalies are considered: 1 The absolute breach of the obligation of keeping the accounts or books or records required by tax law. 2 The keeping of separate accounts that relate to the same economic activity and exercise, do not reveal the true situation of the company. 3 The improper keeping of books of accounts or books or records required by tax law, by false entries, records or amounts, the omission of accounting transactions in accounts or wrong in a way that alters its fiscal account. Require that the incidence exceeds 50% of the base of the penalty. b) The use of invoices, or other forged or falsified documents, provided that the incidence of false documents or media or misrepresented the rate of over 10 percent of the base of the penalty. c) The use of individuals or entities filed when the offender, in order to conceal his identity, has made include the name of another, with or without their consent, ownership of the property or rights, obtaining income or capital gains or conducting transactions with tax significance of which derives the tax obligation whose violation constitutes the infringement to be punished.

The Defenses

Defenses are considered:

  1. Lack of capacity to act: Only those who have the capacity to comply may not meet the tax rule.
  2. Force Majeure: No one is forced to do something impossible. No one will respond to those events that had not been anticipated or foreseen, were inevitable. Force majeure is set in our legal system as an exemption from liability obligations.
  3. Collective decision that saves the vote or is not: Non-participation in a collective agreement or decision, either by saving a vote or not attending the meeting, rather than a cause of exclusion of liability is a case of atypical behavior.
  4. The erroneous admission office have put the necessary diligence in complying with tax requirements, whereas this has occurred when the obligor has acted under cover of a reasonable interpretation of the rule, or has been adjusted in its action to the criteria expressed by the Administration competent tax in their publications and written communications. Neither is required if the taxpayer liability adjusts its performance to the criteria expressed by the Administration in response to a query. Should not lead to the mistake of thinking according to a literalist interpretation that any omission of tax revenue is a violation and if the taxpayer can prove that he acted diligently is exempt from punishment.

Types of Violations and Penalties

Slight Infractions

The following are considered minor infringements:

  • The obligation to submit within self-assessments or statements without causing financial loss to the Treasury.
  • The obligation to report the tax domicile or their change.
  • The obligation to deliver to recipients of income subject to withholding or income has the appropriate certification.

Minor offenses related to here are punishable by monetary fines fixed.

Serious Infractions

The following are considered serious breaches:

  • “Order without having obtained improperly returns: Punishment is 15% of the base of the penalty.
  • -Request unduly benefit or tax incentives: A fine set of 300 €.
  • -Determine unduly positive or negative items or tax credits to offset or deduction in the base or in the share of forward-looking statements: The basic foundation of the penalty is the amount of undue determined. Punishment between 15% and 50%.
  • “To impute improperly or not bases, revenues or results of the entities subject to the imputation system: The basis of the penalty is the amount of quantities not taken. Sanction of 40%.
  • “Wrongly charged deductions, credits and prepayments: The basis for the sanctions is the result of adding the differences between the quantities positive sign that should be charged and charged. Sanction of 75%.
  • “The breach of obligations in accounting or registry: Sanctions may include fines fixed or proportional.
  • “The resistance, obstruction, or refusal to excuse the actions of the Administration: The punishment may include fines fixed or proportional.
  • “The breach of duty of secrecy imposed on retainers and forced to make payments on account: The penalty is the fixed fine of € 300.

Infringements mild and very serious breach of the duty of disclosure of information on deductions or payments.

  • Minor infringements: If the taxpayer is required to submit self-assessment that includes the income subject to withholding or income account. The basis of the penalty is the difference between keeping or entering account and that should have been done. Sanction of 35%.
  • Very serious infringement: If the taxpayer is not required to submit self-assessment. Penalty of 150%.

Infringements minor, serious and very serious breach of the duty of billing.

  • Grave violation: When is a breach of the requirements to be met invoices or documents serving or in the non-issuance or retention of invoices or documents. Punishment proportionate to the amount of the invoices or documents.
  • Very serious infringement: If you enrolled bills or documents with false or distorted. Penalty fine of 75% of operations.
  • Minor offenses: The breach of duty of issuing and maintaining records of movement required by legislation.

Minor offenses, serious and very serious breach of the obligation of payment declaration.

  1. Self-Assessments: Stop an infringement tax paid by the deadline established by the legislation of each tax on all or part of the tax liability that should be of the correct reverse the tax.
    • Mild-Violation: When the base of the penalty is less than or equal to 3000 € or more than that, there is no hiding.
    • Serious violation: The infraction is serious when the base exceeds € 3,000 and there hiding. However, although the basis of the penalty is less than or equal to 3,000 €, the offense is classified as severe: · were used invoices, or false documents but that does not constitute fraudulent means. · When carrying books or records incorrectly and defects affecting over 10% and less than 50% of the base of the penalty. · When you no longer enter amounts deducted or should have been retained account or enter a percentage less than or equal to 50% of the base of the penalty.
    • Very serious infringement: The offense is classified as very serious if we have used fraudulent means. In this case the penalty rises to a rate of 100 to 150% of the base.
  2. Statement: Constitute infringement tax violating the obligation to provide full and correct statements and documents necessary for the Administration to settle may be appropriate in cases where it follows the system of reporting and administrative liquidation.
    • Mild-Violation: When the base of the penalty is less than or equal to 3000 € or more than that, there is no hiding.
    • Serious violation: The infraction is serious when the base exceeds € 3,000 and there hiding. However, although the basis of the penalty not exceeding € 3,000, the offense is classified as severe: · were used invoices, or false documents but that does not constitute fraudulent means. · When carrying books or records incorrectly and defects affecting over 10% and less than 50% of the base of the penalty.
    • Very serious infringement: The offense is classified as very serious if we have used fraudulent means. In this case the penalty rises to a rate of 100 to 150% of the base.

Infringements minor, serious or very serious by the receiving refunds constitute undue infringement taking unfair tax returns under the regulation of each tax. The basis of the penalty is the amount improperly returned.

22: Revision of Tax Acts

Concept

Administrative review function in the matter of tax acts. In our legal system, administrative acts have a presumption of validity or legality. Tax administrative acts can be subject to review and modification when they do not conform to legality. The exercise of regulatory power and the acts of application of taxes and sanctions are regulated and can be challenged in administrative and judicial review under the terms established by law. The review can be carried out by the administration itself or by the judicial bodies, which may apply to the administrative jurisdiction. It is necessary to exhaust the normal administrative channels beforehand. This is a necessary step and the first contestation before the courts of justice. Administrative review is a necessary channel for the protection of the interests of citizens against errors, extravagance, and anomalies of the administration. The modalities of administrative review of tax acts are: -Special procedures for review. -Appeal for reversal. -Economic-administrative claims. In the first case, it is about understanding the review of the following procedures: -Review of null and void acts. -Declaration of harmfulness of voidable acts. -Revocation. -Rectification of errors. -Refund of undue income. In the other two cases, administrative review is carried out through an appeal filed by the interested parties and has special characteristics in relation to the general regulation of administrative review.

Special Review Procedures

The review of official power is the first exceptional option that the administration has to review its own actions without resorting to the courts, without even waiting for their refutation by the interested parties. It seeks to cleanse administrative action of acts whose subsistence is considered intolerable from the point of view of legality and public interest. This power of review must be softened by the requirements of legal certainty, since it is about reviewing firm acts that normally enjoy the presumption of legality. Therefore, this power of review is considered exceptional and its exercise must be limited. The principle of legality imposes on any authority the duty to react against acts that contradict the legal system. They must ensure the permanent adaptation of their acts to legality, which is why the review of administrative acts and the recognized rights of the administered is granted. For administrative review to be a power, the administration must be granted the power to extinguish or alter already consolidated situations. Therefore, the powers of review must be conditioned in these cases by establishing the necessary guarantees for citizens.

Limitations imposed on the review:

  • The review procedure can only be initiated for the causes indicated by law.
  • The tax administration may not annul its own resolutions to the detriment of the interested parties. To obtain its cancellation, the administration must previously declare them harmful to the public interest and challenge them in contentious-administrative proceedings.
  • Acts of application of taxes or imposition of sanctions or resolutions of economic-administrative claims that have been confirmed by a final judicial decision may not be reviewed in any case.
  • Establishment of a maximum period of one year for the exercise of the review power in the cases of rectification of material errors and revocation.
  • The powers of review may not be exercised when, due to the statute of limitations, the passage of time or other circumstances, their exercise is contrary to equity, good faith, the rights of individuals or the law.

Absolute Nullity or Nullity of Full Right

A legal act or business is null, with absolute nullity, when its ineffectiveness is intrinsic and ab initio, therefore it lacks legal effects without the need for a prior challenge. Characteristic consequences: immediate ineffectiveness of the act; general character of the nullification and prescription impossibility. Immediate confirmation or annulment implies that the act is ineffective by itself, without the need for the intervention of the judge, who, in any case, may be asked for a declaration of nullity in the event that it is necessary to destroy the created appearance. Any person may seek annulment and even the judge may appreciate it ex officio at any time, since it is not extinguished by revocation or by prescription. A null act is one that, due to being affected by a particularly serious defect, should not produce any effect and, if it does, it can be annulled at any time without the defect being remedied or the passage of time being able to be opposed. Acts issued in tax matters may be declared null and void in the following cases:

  • Those that infringe on constitutional rights and freedoms susceptible to protection.
  • Those that have been issued by a manifestly incompetent body due to the subject matter or the territory.
  • Those that have an impossible content.
  • Those that are constitutive of a criminal offense or are issued as a consequence of it.
  • Those that have been issued totally and absolutely disregarding the legally established procedure.
  • Express or presumed acts contrary to the legal system by which powers or rights are acquired when the essential requirements for their acquisition are lacking.
  • Any other that is expressly established in a legal provision.

The nullity procedure may be initiated: -By agreement of the body that issued the act. -At the request of the interested party. The admissibility of requests made by the interested parties may be agreed upon without the need for an opinion from the advisory body, provided that the act is not final in administrative proceedings. The procedure for reviewing acts that are null and void is expressly provided for those acts of application of taxes that are final in administrative proceedings and against which no administrative appeal has been filed.

Revocation

The tax authorities may revoke their acts for the benefit of the interested parties when it is deemed that they manifestly infringe the law, when supervening circumstances affect a particular legal situation and show the inappropriateness of the act issued, or when the interested parties have been defenseless during the procedure. Revocation shall not contravene the principle of equality, the public interest or the legal system. Revocation, as it is always intended to favor the addressee of the act and will normally affect acts of encumbrance, the legal precautions are not established in relation to the requirements of legal certainty or the protection of more or less consolidated favorable situations, but mainly revolve around the public interest and respect for the legal system itself. Revocation acquires the character of a flexible, fast and simple extrajudicial means of resolving conflicts that can only result in the normalization of conflicts for the benefit of both the taxpayers and the tax administration itself, seeking to reduce them through the correct application of the law. In tax matters, revocation is essentially based on grounds of legality, but it can also be based on convenience or opportunity. The revocation procedure can only be initiated ex officio and always before the statute of limitations has expired. This means that it is also possible to initiate it at the request of the interested party. The law remits its determination to a development regulation, which must be different from that of the body that issued the act. In the file, the interested parties must be heard and a report from the body with legal advisory functions on the origin of the revocation must be included. The maximum period to notify the resolution is 6 months from the notification of the agreement initiating the procedure. If the aforementioned period elapses without express resolution being notified, the procedure will expire.

Rectification of Errors

The body or entity that issued the act or the resolution of the claim will rectify at any time, ex officio or at the request of the interested party, material, factual or arithmetic errors, provided that the statute of limitations has not expired. In particular, acts and resolutions of economic-administrative claims in which an incorrect assessment of the facts resulting from the documents incorporated into the file is evident will be rectified by this procedure. The resolution will correct the error in the amount or any other element of the act or resolution that is rectified. The error, whether material, factual or arithmetic, so that it can be eliminated expeditiously by the administration, must be characterized as being obvious, manifest and indisputable, that is, evident by itself. If there is any doubt about the intended error or if data outside the file is required, mechanical and immediate rectification is not possible, and the maximum period for the annulment procedure is 6 months to resolve, counting from the request submitted by the interested party or from the notification of the agreement initiating the procedure ex officio. If said period elapses without an express resolution being issued, the revocation procedure will be deemed to have expired if it was initiated ex officio, or the request will be deemed to have been rejected by administrative silence if the procedure was initiated at the request of the interested party.

Refund of Undue Income

The procedure for the recognition of the right to a refund of undue income is initiated ex officio or at the request of the interested party in the following cases:

  1. When there has been a duplication in the payment of tax debts or penalties.
  2. When the amount paid has been higher than the amount to be paid resulting from an administrative act or self-assessment.
  3. When amounts corresponding to tax debts or penalties have been paid after the statute of limitations has expired.
  4. When this is established by tax regulations.

This procedural channel does not cover all cases of refund of tax revenue, but only those that should not have been made when they were made. Revenue under an administrative act or those that are required are never undue, since they are a consequence of compliance with one or the other. It is a different matter if the revenue is required by illegal acts, but this circumstance must be assessed through the appropriate review procedures. The aforementioned right may also be recognized as a consequence of a review procedure, an administrative act or an economic-administrative or judicial resolution. In these cases, therefore, the right to obtain the refund of what was paid does not require a special recognition procedure. Also, when a taxpayer considers that the submission of a self-assessment has led to an undue payment, they may request the rectification of said self-assessment in accordance with the procedure regulated by regulation. The procedure is structured in two phases: one declarative of the recognition of the right and the other executive. The declarative procedure is initiated ex officio or at the request of the interested party; it is possible that the statute of limitations has not expired. Once the procedure has been initiated, the first phase of instruction will take place in which the administration verifies the origin of the refund, and the interested party must be given a mandatory hearing. The deadline for notifying the resolution is 6 months from the request submitted by the interested party or from the notification of the agreement initiating the procedure ex officio, after which the procedure will be deemed to have expired if it was initiated ex officio, or the request will be deemed to have been rejected if it was initiated at the request of the interested party. The right to a refund of undue income expires after 4 years.

Declaration of Harmfulness of Voidable Acts

The tax administration may not annul its own resolutions to the detriment of the interested parties. The tax authorities may declare their actions and resolutions favorable to the interested parties that incur any violation of the legal system harmful to the public interest, so that their subsequent challenge in contentious-administrative proceedings may proceed. The declaration of harmfulness is a means by which the administration can challenge its acts declarative of rights before the courts of justice, susceptible to being annulled for incurring any violation of the legal system. This is provided for those tax administrative acts contrary to the legal system or affected by a defect of lesser severity than that which leads to nullity. The administration is not obliged in these cases to follow the aforementioned procedure. The procedure for the declaration of harmfulness, the GTL establishes that it may not be adopted once 4 years have elapsed since the administrative act was notified and requires a prior hearing of all those who appear as interested parties in the procedure. The deadline for declaring harmfulness is 3 months from the initiation of the procedure, after which it will expire.

Appeal for Reversal: Concept, Nature, Procedure and Effects

It is the one that is filed before the same authority that issued or delivered an administrative decision so that, by an act of contrary authority, it revokes the appealed act or decision. Its foundation is, therefore, to allow the body that issued the act to reconsider it before it has the opportunity to submit it to economic-administrative bodies. In tax matters, the appeal for reversal is optional. The appeal must be filed, where appropriate, prior to the economic-administrative claim and both procedures cannot be filed simultaneously. The acts of the tax administration that are susceptible to an economic-administrative claim may be the object of an appeal for reversal. The competent body for its resolution will have knowledge of all the questions of fact or law offered by the file, whether or not they have been raised in the appeal, without in any case the initial situation of the appellant being able to worsen. If the competent body deems it appropriate to review issues not raised by the interested parties, it must expose them to them in order to make the allegations they deem appropriate. The following are entitled to file the appeal: tax obligors, infringing subjects and any other person whose legitimate interests are affected by the administrative act. The appeal must be filed within a period of one month from the day following the notification of the appealable act or the day on which the effects of administrative silence occur. The filing of the appeal interrupts the deadlines for the exercise of other appeals, mainly the economic-administrative one, which will be counted again from the date on which the express resolution was notified or, where appropriate, the day on which it is deemed to have been rejected. The appeal begins with the filing of the appeal, together with the allegations and, where appropriate, the documents that serve as justification or foundation. The appeal must be resolved, in general, within a period of one month from the day following its submission by means of a resolution.

Suspension: The Problem of the Contested Act. Reimbursement of the Cost of Guarantees, if Necessary

In general, it should be noted that administrative acts are presumed legitimate and are, therefore, immediately enforceable. Thus, the filing of an appeal for reversal does not in itself determine the suspension of the execution of the appealed act, but it may be suspended while its conduct is adequately guaranteed. This suspension in this case has an automatic character, given that it is understood to be granted by the mere request. The guarantee presented must cover the amount of the contested act, the interest on arrears generated by the suspension and the surcharges that may be applicable, and may include: -Deposit of money or public securities. -Guarantee or bond from a credit institution. -Personal and joint and several guarantee of other taxpayers. The execution of the appealed act may be suspended without the need to provide a guarantee when an arithmetic, material or factual error is appreciated. Also, if the challenge has as its object a tax sanction, its execution will be automatically suspended without the need to provide a guarantee until it is final in administrative proceedings. If the appeal does not affect the entire tax debt, the suspension will refer to the appealed part, and the appellant will be obliged to pay the remaining amount. Finally, when the contested amount must be paid in whole or in part, interest on arrears will be settled for the entire period of suspension, unless the resolution is not issued within the maximum period established for resolving it. In this case, interest on arrears will not be required for the time that the sanctions have been suspended.