Regional Federal Courts throughout the country (TRFs 1 to 6) are issuing condemnatory rulings against the Federal Revenue Service of Brazil, accusing the agency of illegally blocking the compensation of tax debts with third-party judicial credits. Recent decisions counter what the courts consider a retreat and abuse by the Tax Authority, which ignores Constitutional Amendment No. 113/2021 and relies on outdated rules to attempt to prevent the so-called "account matching."
The Judiciary has ordered the Union to create administrative mechanisms to enable the compensation operation, removing sanctions and ensuring legal certainty for companies and consulting firms that were affected by the bureaucratic hurdles imposed by the Federal Revenue Service.
The legal controversy revolves around the application of Article 100 (§11) of the Federal Constitution. This provision was introduced to balance public accounts and avoid the State's financial collapse, giving companies the faculty to use liquid and certain credits, their own or acquired from third parties, to pay off installment debts or debts enrolled in active debt.
