“Solve et repete”. New ruling of the Supreme Court of Justice

In November 4 2008, the Supreme Court of Justice ruled in the case “Orígenes AFJP S.A. c/ Administración Federal de Ingresos Públicos”, and revoked the decision of Tribunal III of the Federal Court in Social Security Matters that had rejected the appeal submitted by Orígenes A.F.J.P against a notice of deficiency issued by the Federal Tax Authority (“AFIP”) on social security contributions.

The requirement of advance payment concerning social security matters arises from article 15 of Law No 18,820, which states that the admission of the appeal is subject to the deposit of the amount of the debt assessed.

Regarding taxation matters, after a Federal Tax Court decision, the taxpayer may file an appeal before the Federal Court in Administrative Matters (Article 194 of the Tax Procedures Law). However, if the taxpayer fails to prove the advance payment within 30 days of the notification of the ruling or the resolution approving the liquidation, AFIP may execute the debt. At a municipal and provincial level, once exhausted, the administrative instance the amount of the debt assessed should be paid in order to file a lawsuit.

Without getting into the merits of the case but focusing in what constitutes the requirement of the advance payment, Orígenes A.F.J.P appealed the debt assessment made by the AFIP and Tribunal III of the Federal Court in Social Security Matters rejected the appeal. On the grounds that the surety insurance filed was not proper to guarantee the Treasury interest due to the fact that it was issued in favor of the Court and for a fixed amount. Furthermore, it understood that the bond did not constitute an executable title by the AFIP, nor covered unlimitedly the debt which may result.

In view of this decision, Orígenes A.F.J.P. filed an extraordinary appeal before the Supreme Court of Justice. Its main arguments were the violation of the due process in the administrative instance and the denial of access to justice.

Finally, the Supreme Court of Justice –that appropriated the grounds of the Fiscal Attorney’s Legal Opinion–- resolved that the insurance filed by Orígenes AFJP was sufficient to guarantee the Treasury’s interest; hence the requirement of payment in advance was fulfilled.

This decision is important since it would admit certain flexibility in favor of taxpayers in fulfilling the requirement of advance payment, at least regarding social security matters. Time will tell if this same criteria is accepted for purely tax matters.