In recent tax practice, the term “inactive taxpayer” has been used pretty often. However, it has not been associated to the term “annulment of the President of ANAF’s Order no. 1167/2009” too frequently, due to the fact that the judicial practice has timidly coagulated.
The civil judgment no. 873/23.03.2016 of the High Court of Cassation and Justice – Administrative and Tax Litigation Section confirmed a decision of annulment of the President of ANAF’s Order no. 1167/2009 delivered by the Alba Iulia Court of Appeal, stating the fact that in the period of time from 2009 to 2016, a taxpayer declared inactive was in fact active.
The respective inactive taxpayer was represented before the courts by Mr. Cosmin Flavius Costaş, PhD (the Arad Bar Association – Costaş, Negru & Asociaţii) and by Ms. Adina Laza (the Hunedoara Bar Association).
The innovative nature of the legal solution may be viewed in the light of the essential arguments discussed in the case.
It is to be reminded that, on the 3rd of March 2008, the Government Emergency Ordinance no. 19/2008 modified article 78 paragraph (5) of the Tax Procedure Code, which was rewritten as follows: “Natural person taxpayers or any other entities without legal personality who are not fulfilling their tax return liability for two different consecutive deadlines and whose measures of fulfilling their tax liabilities have not been approved by the competent tax authority following the taxpayers’ request, will be declared inactive, article 11 paragraphs (11) and (12) of Law no. 571/2003 regarding the Tax Code, with subsequent modifications and additions, being applicable.”
In enforcing this legal text, the President of ANAF’s Order no. 819/2008 regarding the Procedure for declaring the inactive taxpayers was approved as secondary legislation. In concreto, the procedure was the following:
- Every month, within 15 days of the tax return liability deadline, the competent tax authority draws up the list of taxpayers who didn’t fulfil their reporting obligations, issues and sends notifications to this category of taxpayers.
- Within 15 days of the date of sending the notifications, the competent tax authority draws up the list of taxpayers who meet the requirements in order to be declared inactive, eliminating from the list the taxpayers who filed their tax return following the notifications.
- In order to draw up the above-mentioned list, it is taken into consideration the following: a) only the taxpayers who did not fulfil their reporting obligations following the two consecutive deadlines will be selected to be part of the list; b) the secondary establishments of taxpayers who only have the liability to file salary tax returns will not be added to the list.
- The above-mentioned list must contain the following information: a) the name of the taxpayer; b) the tax identification number; c) the tax residence; d) the tax identification number for each registered secondary establishment of the taxpayer.
- Within maximum 5 days of the expiration of the date referred to at point 2, the lists containing the taxpayers who meet the requirements of being declared inactive are sent to the General Directorate of Information Technology.
- Within 5 days of receiving the lists containing the taxpayers who meet the requirements of being declared inactive, the General Directorate of Information Technology draws up the List of the taxpayers who meet the requirements of being declared inactive, consolidated nationally, and sends it to the General Directorate of Proceedings for Income Administration, in order for it to elaborate the project for the President of the National Agency for Fiscal Administration’s Order of approving this list.
- The above-mentioned project shall be published on the National Agency for Fiscal Administration’s website, in accordance to Law no. 52/2003 regarding the decisional transparency within public administration.
- On the day of the publishing, the General Directorate of Information Technology sends to the competent tax authorities the list of the taxpayers who meet the requirements of being declared inactive, registered in their tax records.
- Within 5 days of the publishing of the order project on the website, the competent tax authority sends to every taxpayer in the list that is in its administrative competence, a notification regarding the taxpayer’s inclusion in the list of the taxpayers who meet the requirements for being declared inactive, together with the requirements that must be met in order to avoid it.
- Within 3 days of the expiration of the 30-day term from the date of publishing the order’s project on the website, according to point 7, the competent tax authorities send to the General Directorate of Information Technology the final list of the taxpayers who meet the requirements of being declared inactive.
- In order to draw up the above-mentioned final list, the competent tax authority checks in its own tax records, for each taxpayer enlisted, if the requirements for being declared inactive are still met.
- After receiving the final list of the taxpayers who meet the requirements of being declared inactive, the General Directorate of Proceedings for Income Administration assures the achieving of the stages concerning the approving and publishing in the Official Journal of Romania, Part I, of the President of National Agency for Fiscal Administration’s Order for the approval of the List of the taxpayers declared inactive.
As can be noticed, the legislator proposed a clear procedure for declaring the taxpayers as inactive in accordance to article 78 paragraph (5) of the Tax Procedure Code, with definite stages:
– initial selection
– taxpayer notification no. 1
– secondary selection
– elaborating the project for the ANAF President’s Order
– publishing the project on the website
– taxpayer notification no. 2
– final verification of requirements for inactivity
– approval and enforcement of the ANAF President’s Order
– publishing the ANAF President’s Order in the Official Journal of Romania, Part I.
The effects of carrying out a complete procedure of this sort were mentioned at point (A) 2 of the President of ANAF’s Order no. 819/2008: “The declaring of inactive taxpayers begins from the date of the President of the National Agency for Fiscal Administration’s Order for the approval of the List of the taxpayers declared inactive is published in the Official Journal of Romania, Part I.” Per a contrario, the procedural blocking in any of the stages made the procedure inefficient, because:
– In principle, an act that is not published in the Official Journal of Romania, whenever the publishing is mandatory, leads to the act’s unenforceability.
– Nevertheless, according to article 45 of the Tax Procedure Code, declaring a taxpayer as inactive could not be invoked against other taxpayers due to the lack of communicating the administrative act that applied this penalty, based on article 78 paragraph (5) of the Tax Procedure Code.
The study we carried out while preparing the case reveals the fact that from 2008 to 2010, in the Official Journal of Romania, no Order of the ANAF’s President regarding inactive taxpayers was published (even if we cannot prove a negative fact, we can still affirm it). Taking into consideration the above-mentioned facts, there can only be one conclusion: from 2008 to 2010, no taxpayer in Romania was declared inactive since the procedure referred to in the President of ANAF’s Order no. 819/2008 had not been finalised.
On the 25th of May 2009, the Government Emergency Ordinance no. 46/2009 modified article 78 paragraph (5) of the Tax Procedure Code again, as follows: “(5) Legal persons taxpayers or any other entities with no legal personality are declared inactive and are being applied article 11 paragraphs (11) and (12) of Law no. 571/2003 regarding the Tax Code, with subsequent modifications and additions, if they meet one of the following conditions: a) they do not fulfill, during a calendar semester, any reporting liability prescribed by law; b) they evade the tax inspection by declaring a registered office that does not allow the tax authority its identification; c) the tax authorities conclude that they do not operate in the declared registered office or domicile for tax purposes.”
As a consequence, with regard to the new terms of article 78 paragraph (5) of the Tax Procedure Code, any procedure for declaring the inactivity involved the prior classification of the taxpayer in one of the scenarios referred to in paragraphs a) – c) and also involved following the strict procedure referred to in Order no. 819/2008.
At that particular moment, the President of ANAF’s Order no. 1167/2009 was enacted. With regard to this order, due to the information provided by the tax authorities, we know the following:
– Order no. 1167/2009 was never published in the Official Journal of Romania.
– The order became effective, according to the information contained in the Register for inactive taxpayers, on the 11th of June 2009, a date determined by the President of ANAF.
– Based on this order, several taxpayers were registered or are still being registered in the Register for inactive taxpayers.
– The practical consequences of the registration are the ones provided by article 11 paragraph (11) and (12) of the Tax Code, doubled by the annulment of the registration for VAT purposes of the taxpayer declared inactive.
In this respect, several taxpayers – notified of their inactivity after 2 or 3 years in some situations – claimed to the contentious administrative and fiscal courts for the partial annulment (as far as the claimants are concerned) of the President of ANAF’s Order no. 1167/2009, invoking the underachievement of the procedure for the direct notification of the taxpayer; the unpublishing of the President of ANAF’s Order no. 1167/2009 in the Official Journal. Essentially, the tax authority replied offering a sole argument: the President of ANAF’s Order no. 1167/2009 is an administrative act of individual nature and only administrative acts of regulatory nature must be published.
In the legal affair finalised before the High Court of Cassation and Justice on the 23rd of March 2016, the inactive taxpayer proved the fact that stages 1, 9 and 12 of the procedure regulated in the President of ANAF’s Order no. 819/2008 were not followed. In fact, invoking the tax authority’s obligation to fulfill the “tax disclosure” of administrative acts that affect the taxpayer’s tax situation, the taxpayer managed to prove that the procedure of declaring a taxpayer as inactive was not followed.
Regarding the tax consequences, the High Court of Cassation and Justice’s judgment orders the tax authority to redimension all the tax liabilities of the reactivated taxpayer and its commercial partners from 2009 to 2016.
