Argentine Supreme Court Rules on Requirements for Forgiveness of Fines

On August 27, 2024, in the case “Natusur S.A. c/ AFIP DGI s/contencioso administrativo – varios,” the Argentine Supreme Court ruled on the requirements for the forgiveness of fines under Law 27541.

In the facts of the case, the Argentine Tax Authority had, through a resolution, imposed a fine on a company, holding it liable for not paying taxes regarding the income tax return for the 2014 tax period. The taxpayer filed an appeal for reconsideration, and the Argentine Tax Authority rejected it. This led to the company filing a lawsuit before the Federal Court 4 of the City of Mar del Plata.

The company requested the Court the forgiveness of the fine for falling under the provisions of article 12, paragraph 4 of Law 27541. This paragraph establishes that “fines and other sanctions, corresponding to substantial obligations accrued on July 31, 2020, shall be forgiven as a matter of law, provided that they were not final on the date of entry into force of this Law and the main obligation had been cancelled by that date.”

The Court held that one of the necessary requirements for forgiving the fine is submitting Form 408 (NM) before the Tax Authority. This implies the acceptance and waiver of the action and of the right, including the right of repetition, for the concepts and amounts for which the request is made. The Court decided not to grant the request and to impose the costs of the trial on the plaintiff.

The company appealed the ruling. However, the Federal Court of appeals of the City of Mar del Plata confirmed it, stating that the requirements in article 9 of Law 27541 had to be met to forgive the fines. These requirements are: 

1.    the taxpayer’s withdrawal of the action and of the right, 
2.    assuming legal costs and expenses, 
3.    submitting the form F 408 (MN).

Following this second adverse ruling, the company filed a Federal Extraordinary Appeal, arguing that the requirements above do not apply to fines corresponding to substantial obligations accrued as of July 31, 2020, since they are automatically forgiven if: 

1.    they were not final when Law 27562 came into force, 
2.    the main obligation had been cancelled by that date (article 12, paragraph 4, Law 27541).

The appeal was admitted regarding the federal regulations. The Argentine Supreme Court unanimously referred to the opinion of the Attorney General.

After analyzing articles 8 and 9 of Law 27541, the Court highlighted that to regularize the overdue tax obligation together with the forgiveness of fines, the taxpayer must accept to pay, desist, and waive all actions and rights related to these concepts. It also highlighted that the case regulated in article 12 of the Law is different, since “it does not deal with the “regularization of overdue obligations,” but with the “forgiveness” of formal and material fines and compensatory interest”.”  

The Court stated that the forgiveness of fines "does not require the taxpayer’s withdrawal, nor the responsible party’s assuming the payment of the legal costs and expenses of the proceedings in which the substantial infringement is challenged." Therefore, the submission of affidavit form 408 (new version) could not be required.

The Court emphasized that the legislator could have replicated these requirements in article 12 for the substantial fine to be forgiven, but did not do so. The legislator's inconsistency or lack of foresight could not be presumed. Finally, the Court decided to overturn the appealed ruling, and order the Federal Court of Mar del Plata to issue a new ruling.

We consider it important to point out that the Law on Palliative and Relevant Tax Measures (Law 27743) establishes, in article 7 paragraph 5, that "fines and other penalties corresponding to substantial obligations accrued up to and including March 31, 2024, shall be automatically forgiven, provided they have not become final, and the main obligation has been paid by that date.”

The same paragraph states that “this benefit of forgiveness of fines is not subject to the fulfilment of any condition or requirement other than that the payment of the substantial obligation has been made by March 31, 2024, and that the corresponding fine or sanction is not final or cancelled by that date.” The legislator seems to have wanted to make it clear that no additional requirements are necessary for the forgiveness of the fine, including the existing requirements for the regularization of debts and the respective forgiveness of interest.