The Supreme Federal Court (“STF”), in the records of Extraordinary Appeal (“RE”) No. 855,649, decided on the constitutionality of income tax (“IR”) on amounts deposited in the taxpayers’ current account, when they, after being summoned, they are unable to prove the origin of such values.
The case originated in the Federal Regional Court of the 4th Region (“TRF4”), which stated that article 42 of Law No. 9,430 / 96 was constitutional. This article provides, in summary, that when a taxpayer, upon being summoned by the tax authorities to provide the origin of a value deposited in an account with the financial institution, fails to prove this origin, he would be practicing an omission of revenue or income.
In the case of TRF4, the taxpayers were a couple who worked with a kind of factoring, in which the financial transactions in the current account, which were joint, resulted from checks, bonds and money from customers. Thus, the taxpayers’ claim was that the amounts moved in the current account were in fact not their property.
However, after a subpoena from the Federal Revenue Service (“RFB”), the taxpayers were unsuccessful in their claim, since the origin of the amounts could not be demonstrated satisfactorily.
According to the Attorney General’s Office of the National Treasury (“PGFN”), Article 42 of Law No. 9,430 / 96 does not impose a tax on bank deposits, but rather allows a tax increase on what the taxpayer will pay, if there is no proof of the opposite.
The vote on the issue in the STF was the subject of disagreement. On the one hand, Minister Marco Aurélio understood that it cannot not be assumed that all taxpayers are tax evaders, and that Article 42 of Law No. 9,430 / 96 would be incompatible with the Constitution of the Federal Republic of Brazil (“CRFB / 88”) .
However, the winning vote was that of Minister Alexandre de Moraes. According to him, the aforementioned Law did not extend to the taxable event. In his opinion, “(…) it would be enough for the taxpayer to make a mere allegation that the deposits made in his current account belongs to third parties, without relieving himself of the burden of proving the veracity of his declaration” for an attempt to be made to evade the obligations of paying income tax.
Camila Cabral, tax advisor at Drummond Advisors, gave her opinion on the decision. “The assessments based on bank transactions and deposits grew relatively after the transfer of information between financial institutions and the RFB was allowed in 2016. The STF decision, imposing the burden of proof to the taxpayer on bank transactions, can cause situations of insecurity to the taxpayers, due to the fact that certain transactions are subject to the RFB’s scrutiny. It is often possible to prove the origin of a particular resource, but the RFB may not accept the proof ”, she commented.
“As an example, the loan and the loan agreement are cited. Regarding the loan, specifically, regardless of the amount it is a transaction between private individuals, the RFB only accepts loan agreements registered with a notary as a suitable proof. However, the Public Records Law itself lists the loan as a transaction that does not need to be registered”, added the consultant.