According to Article 22 of the Fiscal Procedure Code: “Tax liabilities are extinguished through payment, compensation, enforcement, remission, cancellation, prescription, surrender in lieu of payment, and other methods expressly provided by law.”

According to Article 110 of the Fiscal Procedure Code: “(1) The right of the tax authority to establish tax liabilities is subject to a 5-year prescription period unless otherwise provided by law; (2) The prescription period for the right mentioned in paragraph (1) starts from July 1 of the year following the year for which the tax obligation is due, unless otherwise provided by law; (3) The right to establish tax liabilities is subject to a 10-year prescription period if the liabilities result from an act punishable under criminal law; (4) The period mentioned in paragraph (3) starts from the date of the act constituting an offense, as sanctioned by a final judicial decision.”

In specialized literature, it has been established that the extinctive prescription in fiscal matters is defined as the extinguishment of the subjective fiscal right, specifically the tax liability of any kind, due to the failure to assert it within the prescription period established by law. [M. Nicolae, Treatise on Extinctive Prescription, Ed. Universul Juridic, Bucharest, 2010, p. 1055]

Even if the tax authority can establish tax liabilities for previous periods, they must not be older than 5 years, or 10 years if they result from an act punishable under criminal law.

The effect of the application of extinctive prescription will lead to the extinguishment of the tax liability, thus ending the taxpayer’s fiscal responsibility, specifically concerning liabilities older than 5 or 10 years.

Since the legal norms regulating the prescription of fiscal liability are imperative, and the effect of prescription occurs by law, tax authorities are obliged to apply the legal provisions regarding prescription ex officio. [High Court of Cassation and Justice, Administrative and Fiscal Section, civil decision no. 951 of February 26, 2014]

As we can observe, the incidence of the prescription provided in Article 110 results in the impossibility of issuing a tax liability document (imposition decision) and, consequently, the impossibility of initiating enforcement proceedings.

In conclusion, upon the expiration of the prescription period, the tax authority’s right to establish tax obligations for that period ceases, and according to Article 51 paragraph (2) letter b) of the Fiscal Procedure Code, issuing a new tax liability document is not possible. Essentially, the tax authority must terminate the procedure for issuing the tax liability document.

However, when calculating the prescription period, the taxpayer must also consider the possibility of cases where the prescription period for the right to establish tax liabilities may be interrupted or suspended:

According to the Fiscal Procedure Code, prescription periods are interrupted:

a) in cases and under conditions established by law for interrupting the prescription period for the right to action;

b) on the date the taxpayer submits the tax return after the legal deadline has expired;

c) on the date the taxpayer corrects the tax return or performs another voluntary act of acknowledgment of the due tax liability.

Additionally, prescription periods are suspended: a) in cases and under conditions established by law for suspending the prescription period for the right to action;

b) during the period between the start of the tax inspection/personal fiscal situation verification and the issuance of the imposition decision as a result of the tax inspection/personal fiscal situation verification, provided that the legal duration for conducting these is respected;

c) during the time the taxpayer evades the tax inspection/personal fiscal situation verification;

d) during the period between the declaration of a taxpayer as inactive and their reactivation;

e) during the period between the communication to the criminal prosecution authorities of the report notifying them or the report prepared following a request by the prosecution authorities addressed to the tax authorities to carry out findings regarding acts constituting violations of the provisions and obligations they control and the final resolution of the criminal case;

f) during the period between the date of death of an individual who was under tax inspection/personal fiscal situation verification and the date the inspection/verification authority becomes aware of whether there are successors or not.

If the tax creditor has not applied the prescription rules, the taxpayer may invoke prescription through administrative appeal if they have been served an imposition decision (Article 268 and following of the Fiscal Procedure Code), or through an appeal against enforcement if enforcement proceedings have been initiated against the taxpayer (Article 260 and following of the Fiscal Procedure Code).

Author: Atty. Ionut Sfetcu