Tax obligations can be extinguished in a number of ways ranging from payment of the obligation, through compensation and even the death of the taxpayer (as long as there are no heirs and no assets have been left to satisfy the obligation).
Within the Means of extinction of the obligations is the PRESCRIPTION, which as defined by the Tax Code in its article 42, is a means of acquiring a right or releasing a charge or obligation, for the time and under the Conditions that the same code establishes.
In accordance with article 43 of the Tax Code All tax obligations prescribe at 4 years, counted from the date on which the obligation is enforceable.
It is important to note that the prescription that extinguishes a tax obligation must be invoked by the taxpayer at the time the Administration intends to enforce it, since it is mandatory by law that it can´t be decreed ex officio by the tax authorities.
Consideration should also be given to the exceptionality that exists in cases where the State has not had knowledge or information necessary to determine a tax liability and which is the result of inaccurate declarations or concealment of goods or income, in which case the prescription will be of SIX years instead of four.
As a general rule, the prescription of a principal obligation, also extinguishes any accessory obligation that entails, for example payment of fines and interest arrears.
Prescription may be interrupted, that is that the counting of the 4 or 6 years is suspended, by an act of the Administration or by an act of the taxpayer, in the following cases:
- Because of the determination of the tax liability, whether it is carried out by the Tax Administration or by the taxpayer or responsible, taking as the date of interruption, the notification or the presentation of the respective liquidation.
- For the recognition, express or tacit, of the tax obligation by the taxpayer or person responsible for it;
- Because of the request for extension or other payment facilities;
- Because of the filing of a lawsuit to demand compliance with tax obligations;
- Because of the payment of one or more quotas of extensions granted;
Very similar to the case of taxes and national fiscal obligations, this is the case of municipal taxes, which by law (both in Managua and in other municipalities) prescribe at 2 years, instead of 4 and in this case, The prescription can only be interrupted by means of judicial or extrajudicial collection management duly notified in writing to the taxpayer.
For more information please contact Carlos Navarro cnavarro@alvaradoyasociados.com.ni