Liability for tax debts - who can it concern?

Service-Tax

Taxpayers are, as a rule, personally liable for their tax debts, but in the event of a taxpayer's insolvency, his liabilities towards the tax office may be transferred to third parties - including on spouse, family members or partners. Who can be liable for tax debts?

Liability for tax debts assumed by third parties - general principles

As a rule, the third party is jointly and severally liable for the taxpayer's tax debts. This means that the tax authority may enforce the debt resulting from tax arrears, in whole or in part, from each of the debtors separately, from all of them or only from several of them.

The liability of a third party for tax debts arises after the delivery of the decision on liability, which the tax office adjudicates after conducting the tax proceedings.

Important!

Enforcement of the obligation resulting from the decision on third party liability may be carried out only after ineffective enforcement against the taxpayer's property - i.e. when it was impossible to collect the debt in whole or in part.

The tax authority will initiate an investigation into the payment of tax arrears from a third party also in a situation where:

  • activities aimed at applying enforcement measures were abandoned,

  • administrative enforcement was not commenced as a result of the fact that the enforcement authority made it probable that it was not possible to obtain an amount exceeding the enforcement expenses.

Who is responsible for someone else's inheritance debts?

Third party liability for tax debts arises from the business, family or ownership relationship with the taxpayer. For this reason, if the taxpayer is unable to pay his arrears, the tax authorities will be able to enforce the arrears against third parties.

The taxpayer's spouse

A married taxpayer is responsible for inheritance debts from personal property and joint property (if there is joint property between the spouses) - the consequences resulting from tax obligations affect both spouses. The tax office - in order to collect tax receivables - may direct enforcement to the joint property of the spouses, which, if the spouses do not conclude a property agreement, arise by operation of law upon entering into a marriage. Thus, tax arrears can be recovered from assets acquired after the establishment of a marital community of property, e.g. a shared flat, car, but also received salaries or income from business activity conducted by one or both spouses.

Attention!

The taxpayer's spouse is not responsible for tax debts with the components of personal property, i.e. property acquired before the marriage.

On the other hand, the tax office may enforce income tax arrears resulting from joint taxation of spouses - they are jointly and severally liable for arrears in this tax and in the case of a common form of taxation.

A divorced spouse and a separated spouse

The property community between the spouses ends as a result of divorce or separation. Its place is taken by the property separation system. In this situation, the divorced or separated spouse of the taxpayer is jointly and severally liable for tax debts arising from tax liabilities arising during the joint property and up to the amount of his share in the property.

Attention!

The liability of the divorced or separated spouse of the taxpayer is joint and several, which means that the enforcement of arrears may also cover assets acquired after the dissolution of the marriage or after the establishment of separation of property.

Importantly, this liability also applies to those tax arrears that arose after the divorce or separation of property judgment became final. The provision of art. 110 § 1 clearly refers to obligations, and not only tax arrears arising during the marriage.

A family member of a taxpayer running a business

A family member of a taxpayer running a business under the provisions of the Tax Ordinance also belongs to the category of third parties liable for the taxpayer's tax debts. The liability applies to those members of the taxpayer's family who cooperated with him in the conduct of business, obtaining benefits on this account, and the tax arrears arose in connection with this activity and in the period in which the family member cooperated in running the business. Importantly, obtaining benefits does not only refer to remuneration under an employment contract or other legal title - it also includes, for example, gifts received, i.e. all benefits that resulted from assistance in running a business. Moreover, cooperation may also be one-off or occasional.

Attention!

The liability of a family member of a taxpayer cooperating in running a business is limited to the value of the benefits obtained on this account.

accounting Office

The accounting office may cause damage to its client by its actions, but it is not responsible for the resulting tax arrears of the taxpayer before the tax office or the Social Insurance Institution. Both of these institutions enforce arrears from the taxpayer or payer. In this case, the accountancy office's liability is of a compensation nature - the taxpayer may seek redress for the damage caused by the office in court. The basis for bringing an action to the court is Art. 471 of the Civil Code regarding contractual liability. Pursuant to this provision, the obligated entity (accounting office) is liable for damages resulting from non-performance or improper performance of the obligation and is obliged to repair it. An entrepreneur wishing to obtain compensation from an accounting office will have to indicate the scope of the office's duties and errors and their connection with the damage suffered.

For this reason, entrepreneurs should pay special attention not only to the reputation of the accounting office, but also to examine it in terms of, for example, insurance - if the office is insured for an amount much higher than the required minimum, this may be a guarantee of paying attention to the safety of customers by the office. It is worth ensuring that the contract with the accounting office includes a provision on the office's liability for its own mistakes at least up to the amount of insurance. All contractual provisions on the liability of the accounting office for tax arrears before tax authorities are invalid by law.

Other categories of third parties responsible for someone else's tax arrears

  • The buyer of the enterprise or its organized part is liable for tax debts related to this activity, including those arising before the acquisition of the enterprise or its part. Importantly, in the event of the acquisition of a part of the enterprise, the buyer is also responsible for non-arrears in relation to the part acquired by him - he is jointly and severally liable.

  • The owner, sole owner or perpetual user of an item or property right remaining with the user of a given item or property right in a family, property or capital relationship or resulting from an employment relationship shall be liable for the user's tax debts arising in connection with his business activity, if the item or the law is related to the business or is used to carry it out.

  • A partner in a civil partnership, general partnership, partnership and general partner of a limited partnership or limited joint-stock partnership is responsible for the company's tax arrears.

  • The members of the management board are responsible for tax arrears of a limited liability company, a limited liability company. in organization, joint-stock company, joint-stock company in organization.

  • Members of management bodies of other legal persons are responsible for their tax arrears.

  • A sole proprietorship company established as a result of the transformation of an entrepreneur who is a natural person is responsible for the entrepreneur's tax arrears related to the activity arising up to the date of transformation.

  • The tenant or user of the property is responsible for tax arrears in respect of tax liabilities arising from the taxation of the property arising during the lease or use.

  • The taxpayer's business with his name and surname, business name or business name is responsible for the arrears arising during its conduct.

Limitation periods for third party liability for tax arrears

The tax office may not issue a liability decision to a third party if 5 years have elapsed since the end of the calendar year in which the tax arrears arose, and in the case of joint and several liability of the buyer in VAT - if 3 years have elapsed. It should be emphasized that it is about issuing a decision by the tax authority, and not about delivering it to the taxpayer, which was emphasized by the Supreme Administrative Court in the judgment of July 12, 2016, file ref. II FSK 1544/14.

Apart from the limitation period for the right to issue a decision on third party liability, a distinction should be made between the limitation period for the tax liability established in the decision served on the third party. The limitation period for the liability ends with the lapse of 3 years, counting from the end of the calendar year in which the decision on tax liability was delivered. Importantly, this period may be extended as a result of suspension or interruption of the period. Suspension of the limitation period results in the application of discounts - the postponement of the payment of the liability or the distribution of the payment into installments, after which the limitation period continues. On the other hand, the interruption of the limitation period arises as a result of declaration of bankruptcy or the commencement of enforcement and the application of an enforcement measure. The limitation period begins anew after the reason for interrupting the running of the period has ceased to exist.