The Treasury cannot create conditions not provided for in the law and thus prevent its deductibility.

Uncollectibility is a constant phenomenon that is protected by the obligation to contribute so that this situation does not affect the company with greater damage than it already causes. The Supreme Court of Justice of the Nation (CSJN) has dealt with the issue recently. This is the precedent “DGI (in BBVA records, TFN 19.323-I)” dated 12.2.08 regarding the deductibility of uncollectible credits in Income Tax. In this ruling, the CSJN reminds the State that its first obligation, in the legal tax relationship, is to abide by the law. Specifically, it appeals to its historical jurisprudence in favor of the guarantees that taxpayers have so that the State is predictable in its actions. For many years, the jurisprudence of the highest court of the Nation has stated that it is the obligation of the State to clearly prescribe taxes and exemptions so that taxpayers can easily adjust their respective conduct in tax matters (Rulings: 253:332; 315:820; 316:1115). This encourages tax predictability – so necessary for the activity of companies and much more so in times of current tax relativization – and that we are not only left with the appeal to hope, as W. SCHICK pointed out, that the Administration is willing to submit to the law and the law (cfr. SCHICK, Walter. “The obligation of the tax authorities to collect taxes”. AAVV Six studies on constitutional and international tax law. Edersa, Madrid, 1980 p. 188).

Regarding the ruling that motivates this report, both the National Tax Court and the National Chamber of Appeals in Federal Administrative Litigation (Chamber V) did not make room for the ex officio determination that the AFIP DGI promoted against the taxpayer under the argument that had deducted, from his affidavit of Income Tax, a series of credits, considering them uncollectible, in the terms authorized by the tax law and its regulatory decree.

Both courts -and the CSJN approved this criterion- judged that the requirements for the deduction of doubtful or uncollectible credits in the scope of earnings of the third category, it is enough that the taxpayer accredits having initiated legal proceedings to make the credits effective. Proven this, the taxpayer can allocate such credits as a loss, consequently, deduct them from the tax base for the application of the tax. This is not moved by the fact that there is the possibility of recovering, totally or partially, such credits after the legal dispute that pursues their collection in the commercial field has ended.

The National Treasury argued that they could not be deducted because they were credits guaranteed with rights in rem. This unusual situation that the AFIP DGI wields is not reflected in the applicable regulations, since they do not distinguish between loans with mortgage guarantee and those that do not. The AFIP DGI maintained that only that credit can be considered uncollectible in respect of which the thing given as collateral disappears or when the executive action tending to its collection fails, the initiation of the judicial action not being sufficient. The Treasury, in this way, has dispensed with the normative text that specifically requires that the amounts be justifiable in accordance with the uses and customs of the branch, as provided in article 87 subsection (b) of the Income Tax Law as well as its Regulatory decree that provided for a series of uncollectibility indices, among which is the start of compulsive collection, rules that do not differentiate whether the credits have collateral or not. This is a legal fact that does not exist in the tax law created by the argumentative need of the application authority that transcends legality and frames the obligation to contribute.

It is obvious that this precedent does not solve the multiple situations that the deductibility of bad debts poses. It has only referred to the case of credits guaranteed with rights in rem. The issue related to the costs of execution (court fee and professional fees) cannot be ignored, which often leads companies to a dilemma of the course of action to follow. Companies today use a wide range of resources to try to collect their debts. Thus, telephone calls are used, visits to debtors, the sending of simple letters informing the payment, communicating the possible initiation of legal actions, the interruption of services, the sending of document letters, the referral of the corresponding file to lawyers. external parties to carry out extrajudicial and, eventually, judicial collection procedures.

These actions were not raised in the precedent “DGI (in BBVA records, TFN 19.323-I)” dated 12.2.08 that is discussed, but they are concrete ways that demonstrate the taxpayer’s intention to obtain the collection. Nobody more than this wants to recover their credits. There are still several situations in respect of which greater predictability would be necessary regarding their effectiveness for the deduction, since all of them reveal the intention to recover the credit. I am referring to actions such as (i) the home verification of the debtor and in these cases what collections should be foreseen to demonstrate management; (ii) the cases in which the home verification is carried out but the person who agrees to sign receipt of the notification documentation is a person other than the debtor; (iii) cases in which the debtor’s domicile cannot be identified but the creditor accredits steps to resolve it; (iv) the letters document filled out but without the signature of the recipient, (v) the effectiveness of the indicative nature of the BCRA provisions that make the uses and customs of the banking branch referred to in the law (thus, the BCRA Communication. No. ° “A” 2729 requires charging to losses for the year, calculated on the value of the credits in each situation, according to the time of the delay), among several specific procedures that reveal actions aimed at collection but that do not mean the start of the court action.

As the TFN correctly pointed out in the “Salto 96” case (Court “B”, of 11.2/2000) there are “other indices of uncollectibility” and, as a general rule, the best presumption that the client will not pay is the lack of payment in a reasonable time, as well as not taking advantage of discounts, which reveals a difficult financial situation, so “when balances are increasing, there is evidence at first sight that debtors are approaching the moment when they will totally suspend their payments” (W. A. PATON, Accountant’s Manual, Spanish translation Roberto Casas Alatriste, page 267, Typographical Union, Hispanic American, Mexico).

ALTAMIRANO & ASOCIADOS.