Payment in installments - when is it possible?

Service-Tax

One of the basic obligations of an entrepreneur is the timely payment of tax liabilities. As practice shows, there are very frequent situations when the owner of a company does not have the financial resources to pay taxes on time. However, there are solutions that help entrepreneurs in such situations to avoid negative sanctions for failure to pay the tax liability on time. One of them is the payment of the tax in installments. How to do it?

When is it possible to divide the tax into installments?

As already mentioned, the primary duty of taxpayers is to pay taxes on time, without being requested by the tax office. What can be done if the analysis of the company's financial situation shows that this obligation cannot be met? In such a situation, the basic law is to divide the tax into installments. This is a possibility resulting from Art. 67a of the Tax Ordinance, pursuant to which the tax office has the right to:

  1. to postpone the tax payment date or to spread the tax into installments,
  2. to postpone or to pay in installments the payment of tax arrears together with interest for late payment,
  3. write off all or part of tax arrears, late payment interest or extension fee.

Important!

In the context of the above, it is very important to distinguish between tax liability - tax and tax arrears, which is converted into tax liability after the payment deadline.

Therefore, if even before the due date of payment of the tax liability, the entrepreneur is able to determine that he does not have enough funds to settle the tax, he does not have to wait for the tax arrears with the application for dividing the tax into installments. Importantly, exceeding the deadlines also does not exclude the possibility of exercising this right.

Spreading the tax into installments only at the taxpayer's request

Tax relief in installments is granted only upon a written request of the taxpayer. Importantly, such a letter should meet all formal requirements, i.e. contain information about who it comes from, to whom it is addressed and in what case. The taxpayer's signature is also required. It is extremely important in the application for the payment of tax in installments to show the important interest of the entrepreneur or the public interest related to the granting of the said tax relief.

The tax authority's decision is discretionary, which means that it is the tax authority that decides whether to grant the said relief or not. The basis is the assessment of the real possibility of paying the tax by the taxpayer, made on the basis of the collected evidence.

Distribution of the tax in installments - how many parts?

The regulations do not contain information on how many installments can be spread over the tax arrears or on the amount of these installments. Importantly, the entrepreneur should indicate the debt repayment proposal in the application. It should be remembered that both the final amount of repayments and their schedule will be determined by the tax authority by way of a decision.

Each entrepreneur has the right to appeal against the decision of the tax office to divide the tax into installments within 14 days of its receipt. Such an appeal should be submitted to a higher level body, i.e. the tax chamber.