In tax court proceedings, it’s common for taxpayers to challenge not only the formal aspects of an objection decision but also the substance. Judges often suggest resolving procedural disagreements through a lawsuit under Article 23(2d) of the KUP Law instead of through an appeal. However, this can create complications, particularly when both procedural and substantive issues are at stake.

The Dilemma Between Lawsuit and Appeal

Taxpayers frequently dispute both the procedural aspects and the substance of a decision. If restricted to lawsuits for procedural issues, they risk losing their right to appeal substantive matters if the lawsuit is dismissed. This is due to the three-month appeal deadline, which could pass while the lawsuit is pending, leaving the taxpayer without the chance to challenge the substance of the assessment.

Clarifying Procedural Non-Compliance Eligible for Lawsuits

Article 23(2d) of the KUP Law permits taxpayers to file lawsuits for procedural issues related to tax assessments or objection decisions. Previously, GR No. 74 of 2011 more clearly defined procedural non-compliance, addressing issues like mismatched tax and audit periods and decisions issued without prior discussions. However, GR No. 50 of 2022 has expanded the scope, requiring all procedural issues to be resolved through lawsuits, which means taxpayers cannot raise procedural concerns alongside substantive issues in the same appeal process.

Can Lawsuits and Appeals Be Filed for the Same Decision?

The Tax Court Law does not explicitly prohibit filing both a lawsuit for procedural issues and an appeal for substantive matters regarding the same decision. This leads to an important question: Does this violate the Ne Bis In Idem principle, which prevents the same matter from being heard twice? In theory, no. A lawsuit addresses the procedural validity of the decision, while an appeal disputes the tax liability itself. These are separate issues, so they do not overlap and should not violate legal principles.

The Need for Clear Regulations

The lack of clear guidance leaves taxpayers uncertain about how to proceed when filing both lawsuits and appeals. Without clear rules, they risk missing deadlines or being unable to challenge both procedural and substantive aspects of a tax decision. Clearer regulations are necessary to ensure taxpayers can fully contest all aspects of a decision without the fear of losing legal options.

Conclusion

While taxpayers theoretically can file both lawsuits and appeals for the same decision, the current legal ambiguity creates challenges. Clearer regulations are needed to protect taxpayers’ rights, allowing them to challenge both procedural and substantive issues effectively. This would provide a fairer and more transparent process for resolving tax disputes.