By Marcelo Blecher

On Friday, the 29th, Ordinance 11,956/2019 was published in the Federal Official Gazette (“DOU”), through which the PGFN establishes the procedures, requirements and conditions necessary to carry out the transaction of debts registered in the Federal Government's active debt, as provided for in Provisional Measure 899/2019. Said Provisional Measure, named by the Government as the “Legal Taxpayer” Provisional Measure, was published in the DOU at the end of October with the aim of encouraging the resolution of conflicts between the Tax Administration and taxpayers with federal tax debts, such as PIS, COFINS, IPI, Social Security Contributions, IRPJ, CSLL.

According to the Ordinance, the transaction of debts registered in the Federal Government's active debt may be formalized by one of the 3 (three) modalities provided for in art. 4, namely, (i) transaction by adherence to the PGFN's proposal; (ii) individual transaction proposed by the PGFN; (iii) individual transaction proposed by the debtor registered in the Federal Government's active debt. The sole paragraph of art. 4 also determines that the transaction with debtors whose consolidated value of debts is equal to or less than R$15,000,000.00 (fifteen million reais) will be carried out exclusively by adherence to the PGFN's proposal, item (i), being authorized, in these cases, the non-acknowledgement of individual proposals, items (ii) and (iii).

Although the wording of art. 8, sole paragraph of the Ordinance leads to a possible interpretation that discounts will be granted on the principal, by determining that “the discounts to be granted must be applied proportionally to the legal additions”, under the terms of art. 14, the transaction that involves a reduction in the principal amount of the debt is prohibited, in addition to criminal fines, aggravated fines of 150% for tax evasion, fraud or collusion, debts of taxpayers in the Simples Nacional and FGTS debts.

Regardless of the modality and without prejudice to compliance with other commitments and requirements contained in the Notice or in an individual proposal, the Taxpayer who opts for the transaction must (i) waive any current or future legal claims on which legal actions, including collective ones, or appeals that have as their object the credits included in the transaction are based, by means of a request for termination of the respective process with resolution on the merits; (ii) maintain good standing with the Severance Pay Guarantee Fund (“FGTS”); and (iii) regularize, within 90 (ninety) days, any debts that are registered as active debt or that become due after the formalization of the transaction agreement.

Regarding the form of payment, in addition to providing for the possibility of using federal court orders or third-party court orders to amortize or settle the credit balance transacted, the Ordinance determines that the transaction may involve (i) offering discounts on debts considered irrecoverable or difficult to recover by the Attorney General's Office of the National Treasury; (ii) possibility of installments; (iii) possibility of deferral or moratorium; (iv) relaxation of the rules for acceptance, evaluation, replacement and release of guarantees; and (v) relaxation of the rules for seizure or sale of assets.

Regarding the suspension of the enforceability of the transacted debt, art. 9 expressly determines that until the proposed transaction is completed by the debtor and accepted by the PGFN, it will not suspend the enforceability of the tax credits or the progress of the respective tax executions. It is worth remembering that, in order to accept the transaction, the following parameters will be observed, individually or cumulatively: (i) the time in collection; (ii) the sufficiency and liquidity of the guarantees associated with the registered debts; (iii) the existence of active installments; (iv) the prospect of success of the administrative and judicial collection strategies; (v) the cost of judicial collection; (vi) the history of installments of the registered debts; (vii) the time of suspension of enforceability by court order; and (viii) the economic situation and the payment capacity of the taxpayer.

Notwithstanding the suspension of enforceability being subject to formal acceptance by the PGFN, pursuant to art. 11, only transaction modalities that involve the deferral of payment of the debts covered therein, including through periodic installments, or the granting of a moratorium – a situation in which the Tax Authorities authorize, in advance of the due date of the debt, the extension of the payment term – suspend the enforceability of the transacted credits while the agreement lasts, in accordance with art. 151 of the National Tax Code (“CTN”).

Finally, it is important to highlight that, for taxpayers in judicial recovery, the Ordinance provides in its art. 42, that it is permitted, within 60 (sixty) days from the publication of the Ordinance in the DOU, the presentation of an individual transaction proposal, being an interesting opportunity for taxpayers who find themselves in this situation to seek a less onerous alternative to reduce their tax liabilities.

The Mazzucco & Mello Advogados tax team is available to provide any clarification on this topic.