Applying for paying tax in instalments does not protect from tax enforcement proceedings

When running a business, entrepreneurs often use the option of paying their tax liability in instalments. This allows them to avoid the lump-sum payment of the whole tax which may be too high for the taxpayer – due to various reasons.

Regrettably, it must be remembered that when applying for paying tax in instalments – which is practically associated with not paying the tax – the tax authority may straight away commence the enforcement procedure. It may turn out that the motion for instalments is not recognised and the tax authority commences enforcement procedure with regard to the tax under the motion.

This legal situation that is undoubtedly unfavourable for the taxpayers, is confirmed by the judicature, among others the judgement of Supreme Administrative Court (to 2003.12.31) in Szczecin dated 6 December 2000 SA/Sz 1567/99: “Submitting a motion itself for splitting the overdue tax into instalments was not an obstacle against commencing an enforcement”, or the judgement of the Supreme Administrative Court in Warsaw dated 21 December 2010 II FSK 1722/09: “Submitting a motion for postponement of the tax payment deadline does not decide in the light of art. 33 item 6 of the act on administrative enforcement proceedings on the inadmissibility of an administrative enforcement”.

A tax authority may conduct enforcement before the motion for the instalments is recognised. A decision in favour of the motion and establishing the instalments of the repayment makes the enforcement inadmissible.

As far as the occurrence of a situation when a taxpayer does not pay the tax due and requests the authority to split the tax into instalments, and the tax authority commences enforcement (including seizure of bank accounts and other assets) should be assessed negatively, yet recently this type of situations are more and more frequent (mainly with regard to VAT).

It is also noteworthy that essentially the commenced enforcement proceedings are associated with the necessity to incur charges and costs of the enforcement.