Definitions of tax pendency ex L. 197/2022 – News of DL 30.3.2023 No. 34 (so-called “bill decree”)

FOREWORD

With DL 30.3.2023 No. 34 (so-called “bills decree”), published in the Official Gazette No. 76 dated March 30, 2023 and in force as of March 31, 2023, some changes were made to the definitions of tax pendency introduced by L. 29.12.2022 No. 197 (Budget Law 2023), which are called “tax truce.”

In several cases, the deadlines for adhering to the various definitions and/or paying the amounts or the first installment have been postponed.

Neither the criteria for accessing the definition nor the cases that can be defined have been expanded.

The only exception is the facilitated conciliation, which is no longer possible for processes pen¬ending on 1.1.2023 but for those pending on 15.2.2023.

It should be noted that:

• the application for access to the scrapping of roles has not been postponed, so the deadline of 30.4.2023 remains;
• a specific definition has not been provided for acts contesting only penalties.

SPECIAL TAX AMENDS

Law 197/2022 provided for a special form of repentance that, although not derogated from, mirrors the regular one governed by Art. 13 of Legislative Decree 472/97.

The main features of the special tax amends are as follows:

• penalties are always reduced to 1/18th of the minimum;
• the violation had to be removed by 3/31/2023;
• the amounts, or the first of 8 installments, had to be paid by 3/31/2023.

As a result of DL 34/2023, both the deadline to pay the amounts (or the first installment) and the deadline to remove the violation (e.g., to submit the supplementary return) are extended from 3/31/2023 to 9/30/2023.

Subsequent installments are due on 10.31.2023, 11.30.2023, 12.2023, 3.31.2024, 6.30.2024, 9.30.2024, and 12.31.2024.

There remains the need to pay interest at the rate of 2% per annum on the installments following the first.

Failure to make a declaration is not repayable.

Omitted payments

The special tax amnesty does not include omitted payments of taxes that have been declared: think of the omitted/late payment of advances and balance of income taxes, or the omitted/late payment of monthly or quarterly VAT.

In general, violations arising from automatic settlement, such as offsets of credits that originate from a non-filed return or errors in the “forward” carryover of tax credits, do not benefit from the amnesty.

There remains, for these violations, the customary amends of Art. 13 of Legislative Decree 472/97

On the other hand, violations likely to emerge as a result of formal control of the declaration, such as tax deductions or deductions from taxable income enjoyed in the absence of the legal prerequisites, benefit from the special amends.

Income earned abroad

The special reprimand concerns undeclared foreign source income although, in relation to the same, the RW panel has not been filled out.

IVIE/IVAFE violations can also be subject to special amends.

In contrast, no special amends can be made for the omission or irregular filling in of the RW framework. There remains, for these violations, the usual amends of Art. 13 of Legislative Decree 472/97.

DEFINITION OF FORMAL VIOLATIONS

Law 197/2022 provided for a definition of violations of a formal nature (erroneous communications, late/misinformed invoicing without any declarative reflection and without effect on the VAT settlement) committed until Oct. 31, 2022.

By paying 200.00 euros per tax period each violation is remedied.

The deadline for payment of the amounts (or the first installment) has been extended from 31.3.2023 to 31.10.2023.

The second installment, on the other hand, remains set at 3/31/2024.

Likewise, the deadline for removing the violation remains set at 3/31/2024.

DEFINITION OF ASSESSMENTS WITH ADHESION

Law 197/2022 introduced a facilitated assessment with adhesion, which allows the reduction of penalties to 1/18th of the minimum and the possibility of payment in 20 quarterly installments (without compensation).

It is limited to notices of assessment appealable as of 1.1.2023, notices served until 3.31.2023, and adhesions based on invitations to cross-examination served until 3.31.2023 and on minutes of findings (PVCs) delivered until 3.31.2023.

DL 34/2023 expressly provides that if the PVC is delivered by 3/31/2023, facilitated adhesion is allowed even if the assessment is served after 3/31/2023.

DEFINITION OF ASSESSMENTS

By Law 197/2022, two forms of facilitated settlement of tax assessments were provided for:

• a facilitated acquiescence related to the cases indicated in Art. 15 of L.D. 218/97 (notices of income tax and VAT assessments, value assessments, settlement notices on the subject of first home, omitted declaration of inheritance), which allows for the reduction of penalties to 1/18 of the amount levied and the possibility of payment in 20 quarterly installments (without compensation);
• a specific acquiescence (at regime not provided for) for tax credit recovery notices, which always allows the reduction of penalties to 1/18th of the imposed and the possibility of payment in 20 quarterly installments (without compensation).

These must be assessments/recovery notices appealable on 1.1.2023 or assessments/recovery notices served up to 31.3.2023. Acquiescence is finalized with the payment of the amounts or the first installment within the appeal deadline.

DL 34/2023 provides for the possibility to settle assessments, settlement notices and tax credit recovery notices that have become final from 2.1.2023 to 15.2.2023.

Payment of the amounts or the first installment must be made by 4/30/2023.

This applies only for the purpose of settlement, as no appeal can be filed after the deadline.

Speculatively, for acquiescences perfected between 2.1.2023 and 15.2.2023 (with payment of the first installment), a rescheduling of the installment plan has been introduced, allowing the reduction of penalties to 1/18th (and not the usual 1/3rd). One must apply for this by the due date of the next first installment. There is no refund of what has been paid in penalties, and penalties already paid cannot be restated.

REGULARIZATION OF INSTALLMENTS FROM ASSESSMENT WITH ADE¬SIO-NE, ACQUIESCENCE, MEDIATION AND JUDICIAL CONCILIATION

Law 197/2022 introduced a regularization of installments arising from assessment with adhesion, acquiescence, mediation and judicial conciliation.

The benefit, consisting of the write-off of penalties and interest, concerns installments due as of 1.1.2023 and, where forfeiture of the deferment has occurred, concerns all remaining installments.

By DL 34/2023, it was provided that regularization is inhibited if a payment notice or notice of default has already been served as of 1.1.2023.

Therefore, if such a notice is served from 2.1.2023 onward, it does not prevent regularization, whose deadline for payment (of all amounts or the first installment) remains fixed at 31.3.2023.

DEFINITION OF PENDING LITIGATION

The definition of pending litigations allows for the definition of pending litigations as of 1.1.2023 at any stage and level of the proceedings.

As a rule, the definition has as its effect the elimination of penalties and interest, however, if on 1.1.2023 the taxpayer:

• has filed an appeal, there is a 10 percent abatement of taxes;
• won in the first instance, there is a 60% abatement of taxes;
• won in the second instance, there is an 85% abatement of taxes;
• has always won and the case is pending in the Supreme Court, there is a 95% abatement of taxes.

Where the dispute concerns only penalties unrelated to the tax, there may be 60% abatement (if there is no judgment or there is but it is negative) or 85% (if the taxpayer has won).

There is zero cost for the settlement if the dispute concerns penalties related to the tax and the tax, in any way, has been paid or settled.

Decree 34/2023 postpones both the deadline to pay the amounts (or the first installment) and the deadline to apply for the definition from 6/30/2023 to 9/30/2023.

The amounts continue to be able to be paid in installments, in a maximum of 20 equal quarterly installments, but without being able to offset.

In keeping with the above, the following deadlines are also postponed:

• the installments (maximum twenty) are to be paid on 10.31.2023, 12.2023 and the subsequent installments on 3.31, 6.30, 9.30 and 12.20 of each year;
• if the taxpayer declares that he/she wishes to avail himself/herself of the definition, the process remains suspended until 10.10.2023 (and no longer until 10.7.2023) and, for the purposes of extinction, the application for definition and the F24 form certifying the payment of the amounts or the first installment must be filed by that date;
• the denial of definition may be opposed by 9/30/2024 (and no longer by 7/31/2024);
• the deadlines for appeals and resumptions that expire from 1.1.2023 to 31.10.2023 (and no longer to 31.7.2023) are suspended for 11 months (and no longer 9 months).

FACILITATED JUDICIAL CONCILIATION

Law 197/2022 introduced the possibility, for trials that were pending in first or second instance as of 1.1.2023, to enter into a facilitated conciliation by taking advantage of the reduction of penalties to 1/18th of the minimum.

As a result of DL 34/2023, the deadline for formalizing the conciliation was postponed from 6/30/2023 to 9/30/2023.

The scope of the facilitated conciliation was also broadened by extending it to pending litigations in first or second instance as of 2/15/2023.

FACILITATED WAIVER OF PENDING JUDGMENTS IN CASSATION.

According to L. 197/2022, the parties may, with respect to cases pending in the Court of Cassation as of 1.1.2023, enter into a settlement agreement with the Internal Revenue Service benefiting from the reduction of penalties to 1/18th of the minimum.

By DL 34/2023, the deadline for waiver was postponed from 6/30/2023 to 9/30/2023.

CAUSE OF NON-PUNISHABILITY

For the crimes of failure to pay VAT (art. 10-ter of Legislative Decree 74/2000, punishability threshold equal to 250,000.00 euros), failure to pay withholding taxes (art. 10-bis of Legislative Decree 74/2000, punishability threshold equal to 150,000.00 euros) and undue compensation of undue credits (art. 10-quater co. 1 of L.D. 74/2000, punishability threshold equal to 50,000.00 euros), there is a cause of non-punishability resulting from the completion, combined with the full payment of the amounts, of any of the definitions provided by L. 197/2022.

For the purpose of non-punishability, it is necessary not only the full payment of the installments or the full amount of the amounts (subject to the waiver of penalties and interest or even the tax if it is a definition of the dispute) but also compliance with the rules governing the individual definition.

From an operational point of view:

• the taxpayer who intends to benefit from non-punishment notifies the judicial authority of the payment of all amounts or the first installment and the Internal Revenue Service of the pendency of the criminal trial, indicating its details;
• at this point the criminal trial remains suspended until the Internal Revenue Service co-municates the proper execution of the definition and the full and timely payment of the installments or all sums.

If the sums are not paid, if there is a forfeiture of installments, or if the fulfillments characterizing the definition are not correct, the Internal Revenue Service notifies the criminal court and the trial continues.

There is a limitation, however: L. 197/2022 definitions (in essence, payment of installments) must ter-minate before the appeal ruling.

LDP remains at your disposal for any further information or in-depth study of the topics discussed above.

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