Zero Litigation 2024: new edition of the program announced

Companies and individuals can renegotiate federal debts up to BRL 50 million

• On March 19, Tax Settlement Notice No. 1/2024 was disclosed in the Federal Official Gazette, marking the launch of the Zero Litigation Program 2024. 

   

  Created in 2023, this program offers individuals and companies the opportunity to resolve tax-related liabilities with the Federal Revenue Service by providing discounts and installment plans for the settlement of those debts. 

   

  For this year’s edition, taxpayers who have tax debts up to BRL 50 million in administrative litigation with the agency are eligible to apply. Check out below some key takeaways: 

Which debts are eligible for negotiation?

The program allows for the negotiation of the following types of debts: 

• Debts under administrative litigation related to taxes under the jurisdiction of the Federal Revenue Service, including social contributions as outlined in Law No. 8,212/1991, 
• Contributions established through tax substitution, 
• Contributions owed to third parties, provided they are paid through a Federal Revenue Collection Payment Form (DARF). 

What settlement options are available?

The program offers different debt settlement options depending on the recoverability of the tax liability, classified according to criteria set by the Attorney General's Office (PGFN). These criteria consider the taxpayer's ability to pay, allowing negotiations under the following terms: 

Debts deemed irrecoverable or difficult to recover 

The regulation allows for a reduction of up to 65% in interest, fines, and charges on the total debt eligible for settlement. It requires a down payment equivalent to 10% of the debt's consolidated value (after applying discounts), payable in up to five installments, with the remaining debt balance spread over up to 115 monthly installments. 

Liabilities in this category encompass debts owed by entities that have filed for bankruptcy, companies undergoing in-court or out-of-court reorganization, or taxpayers with a revoked Individual ID number - CPF. This year, tax liabilities involved in administrative tax litigation for over 10 years were not deemed irrecoverable. 

Debts deemed to have high or medium recoverability 

For these liabilities, a down payment amounting to 30% of the total consolidated debt is required, with the remaining debt balance eligible to be split into up to 115 installments. 

Utilization of carryforwards from tax losses and negative CSLL calculation base 

Regardless of the debt’s classification, payments can also be made using carryforwards from net operating losses (‘NOL’) calculated up until 12/31/2023, limited to 70% of the debt balance. The outstanding balance can be settled in up to 36 installments. 

Note: The minimum installment amount is BRL 100.00 for individuals and BRL 300.00 for sole proprietorships, micro and small businesses, cooperatives, and other civil entities. For all other entities, the minimum installment is set at BRL 500.00. 

Small debts

Irrespective of the debtor's ability to pay, the program provides special terms for clearing tax liabilities up to 60 minimum wages, owed by individuals, micro and small businesses. 

Deadline for applying 

 Those interested in applying for the program must submit their request from April 1 to July 31, 2024. It should be noted that joining the program requires the waiver of the right to  any administrative claims or court appeals that the taxpayer might have concerning the debts under negotiation. 

Companies wishing to apply must also agree to the adoption of an electronic address designated to them by the Federal Revenue Service for receiving notifications at their tax residence. 

Approval of the application is contingent upon meeting the conditions set forth in the public notice and making the first installment payment by the last business day of the month of joining. 

Tax support 

DPC's team of experts offers assistance to both companies and individuals in negotiating tax issues with the Brazilian Federal Revenue Service. Reach out to us at: dpc@dpc.com.br.