Recently, a single-judge decision by the 5th Panel of the Federal Regional Court of the 5th Region (Tribunal Regional Federal da 5ª Região, “TRF5”) lifted the prohibition on adhering to new tax transaction proposals by the Office of the Attorney General of the National Treasury (Procuradoria-Geral da Fazenda Nacional, “PGFN”) for a period of two years. This was for a taxpayer who had a transaction formally rescinded due to default, characterized by the non-payment of three or more installments.

The decision attracted attention and sparked debates about the legality of the prohibition on new adherences, especially considering the economic challenges faced by many companies in Brazil.

The circumstances for rescinding a tax transaction are listed in Article 4 of Law No. 13,988/20. It states that for taxpayers with rescinded transactions, adherence to new transaction programs is prohibited for two years, even if they pertain to different debts.

The recent case analyzed by the TRF5 originated from a Mandado de Segurança (Writ of Mandamus) with a request for a preliminary injunction, filed by an educational institution against an action attributed to the PGFN. It aimed to lift the aforementioned two-year prohibition, allowing the petitioner to participate in the tax transaction proposed via Public Notice PGDAU No. 06/2024.

Here, we highlight relevant aspects of the precedent in question:

Summary of the Petitioner’s Arguments: (i) unconstitutionality of the imposed temporal prohibition, citing violations of the principles of equality, contributive capacity, proportionality, reasonableness, and public interest; (ii) necessity of the transaction for regularizing debts and consequently enabling reentry into the Simples Nacional tax regime, facilitating the continuation of business activities.

First Instance Decision: The 3rd Federal Court of Paraíba denied the requested injunction, reiterating the existence of an explicit legal provision for the prohibition. Following this denial, the petitioner filed an interlocutory appeal seeking to overturn the decision.

Second Instance Decision: On appeal, a single-judge decision by the 5th Panel of the TRF5 granted the requested preliminary injunction, mandating that the PGFN engage in the transaction outlined in Public Notice PGDAU No. 6/2024 with the petitioner.

Currently, the Internal Appeal filed by the PGFN against this single-judge decision awaits judgment, which may modify the understanding expressed in the decision.

Although favorable to the taxpayer, the decision did not address the following aspects:

• The authority of Law No. 13,988/20 to establish the requirements and conditions under which the Union, through the PGFN, can conduct tax transactions, in accordance with Article 171 of the National Tax Code (“CTN”).
• The explicit provision in Law No. 13,988/20 prohibiting new adherence within a two-year period, where PGFN Ordinance No. 6,757/22 merely replicates the literal provisions set forth in the strict sense of the legislation.
• The existence of contrary precedents within the same Federal Regional Court of the 5th Region. For instance, the judgment by the 7th Panel of TRF5, rendered unanimously in Case No. 0807533-78.2024.4.05.84003.

In other Federal Regional Courts, the understanding of the matter has also tended to be unfavorable to taxpayers, based on the explicit provisions of Law No. 13,988/20. Notable examples include precedents from the TRF3 and TRF4.

Therefore, although tax transactions have been an excellent conflict resolution mechanism in recent years, taxpayers should be aware of the terms and conditions established, avoiding potential adverse effects caused by non-compliance, such as the two-year prohibition period for adhering to new transactions, whose legality has been acknowledged by the Federal Regional Courts.