On October 18, 2022, the Internal Revenue Service (hereafter referred to as “IRS”) released a resolution titled “Rules for the Application of Article 200, Numeral 4 of the Tax Code Regarding Direct Sale by the Taxpayer and/or its Responsible Party” [1]. This resolution establishes the following principal points:
Application of the Resolution: By Article 200, Numeral 4 of the Tax Code, “the debtor and/or its responsible party may request authorization from the Tax Administration to sell a seized or prohibited asset to a private individual, provided that the sale price is not less than the expert appraisal value and the proceeds are used to pay the outstanding tax obligations. In these cases, notaries, registrars, and/or other competent authorities must execute and register the corresponding deeds attaching the authorization granted by the active subject and the payment certificate. Once the registration and payment certificate have been submitted, the measure shall be deemed revoked.”
Direct Sale Request: The debtor may request authorization from the IRS to sell the seized or prohibited asset directly before the auction process and must attach the following documents:
Certificates: For real estate, a history of ownership and encumbrances certificate; for vehicles, a single vehicle certificate; and for other movable property, an encumbrances certificate issued by the Mercantile Registry. These certificates must be up-to-date with a date no less than one month before submitting the request.
An expert appraisal of the asset carried out by a qualified expert from the Judiciary Council, Superintendency of Companies, Securities and Insurance, and/or Banking Superintendency, which must have been performed at least 6 months before the submission of the request in the case of real estate, and 2 months for other assets.
Deadline: The IRS, through special collectors designated by the highest authority of the institution, will grant the debtor a period of up to 6 months to carry out the direct sale and deposit the proceeds in the IRS’s account, as well as provide information about the conditions they must comply with to proceed with the sale. The deadline may be extended by one month.
The authorization for sale granted by the IRS suspends the execution of the auction of the asset. However, other collection actions within the coactive process will not be stopped.
If the debtor fails to achieve the direct sale of the asset within the deadline, the particular collector may proceed with seizure or auction. Before the ruling of the order and time for the execution of the auction, the debtor may pay the value of the asset’s sale to the IRS.
Other Encumbrances: The IRS is not responsible for other encumbrances on the asset whose direct sale is authorized other than those ordered by the IRS, so it may proceed with the auction process, respecting the credit priority order provided for by law.
Lifting of Measures: Once the money from the sale has been deposited into the IRS’s account, the particular collector shall issue an authorization to register the sale deeds in the corresponding registers, which shall implicitly revoke any precautionary or execution measures that may have been given over the asset.
Sale Value of the Asset: The direct sale value of the asset cannot be less than the appraised value, which will be considered for the total payment of the tax obligations subject to the coactive process. If the sale value does not cover the total amount of the obligations, it will be considered a partial payment, with interest being paid first, then taxes, and finally fines.
This resolution applies to any assets seized or prohibited from being sold within enforcement proceedings initiated by the SRI, which pertain to outstanding obligations as of the publication date of the Resolution in the Official Registry, i.e., October 28, 2022.
[1] The Resolution was published in the Third Supplement of the Official Registry, number 179, on October 28, 2022.
