Fábio Bernardo
Lawyer at Marcos Martins Advogados
The discussion about the inclusion of ICMS in the PIS and COFINS tax base dragged on in the Federal Supreme Court for two decades until last year when the Court settled the matter in favor of the taxpayer by concluding the judgment in Extraordinary Appeal No. 574.706/PR¹.
In short, the Constitutional Court held that the amount of ICMS included in the price of the product only circulates through the taxpayer’s accounts, constituting a mere cash inflow of value that does not belong to the taxpayer, as it is destined for the public coffers of the states. For this reason, the value of ICMS could not be considered revenue/billing.
The decision was obviously celebrated by taxpayers and lawyers who work in the area of tax law and have long defended this thesis.
In this context, this brief article aims to address the possible repercussions of this understanding on criminal tax law, specifically on the conduct of failing to pay the ICMS declared by the taxpayer into the public coffers.
Initially, it should be noted that Law No. 8,137/90², which defines crimes against the tax order, classifies as a criminal offense in its Article 2, item II the conduct of “failing to pay, within the legal time limit, the amount of tax or social contribution, deducted or collected, as a taxpayer and which should be paid into the public coffers”.
Case law and doctrine in general refer to the crime in question as “tax misappropriation”, essentially resembling the crime of misappropriation in article 168 of the Penal Code, which aims to punish the conduct of a person who misappropriates movable property held in their possession or detention.
The material object of the crime of misappropriation, therefore, is the “movable property” of which the active subject misappropriates.
Both the generic criminal type (article 168 of the Criminal Code) and the criminal type focused on tax law (article 2, item II of Law 8.137/90), require intent, which is configured by the will and awareness of appropriating someone else’s movable property, not returning it to its rightful owner or diverting it from its intended purpose.
The question to be analyzed and answered, therefore, is whether the value of the ICMS tax embedded in the price of the goods and received by the taxpayer can be characterized as “movable property”, which necessarily involves an analysis of the tax liability and the terms “charged” and “deducted” in the criminal code.
The taxable person, according to the definition in article 121 of the National Tax Code, is the person legally obliged to pay the tax.
The Code further divides taxpayers into taxpayers (those who have a direct relationship with the taxable event) and those liable (when, without being a taxpayer, the obligation to pay arises from the law).
Thus, in the case of ICMS, the taxpayer is the person who moves the goods, in the case of ISS it is the service provider, in the case of IPTU it is the property owner, and so on.
Liability, in turn, is generally imposed on a specific person in order to facilitate tax inspection and collection. When the employer deducts the employee’s income tax and pays it into the public coffers, they are liable. The ICMS tax substitute, who pays the state tax authorities the amount of tax due on the movement of goods from another taxpayer, is also liable. The taxpayers in these cases are the employee and the substituted trader.
Having made these considerations, it seems to us that the term “deducted” in the crime of tax misappropriation refers to cases in which there is withholding at source.
The tax is deducted when the person responsible withholds part of the payment due to the taxpayer in order to pass it on to the tax authorities. The employer deducts part of the employee’s paycheck in order to pass it on to the federal tax authorities as income tax or social security contributions owed by the employee.
In these cases, when a deduction is made and the amount is not passed on, there is no doubt that the person responsible for the tax is appropriating movable property, since there is a legal tax relationship between the taxpayer who receives the deduction and the tax authorities. When the person responsible for the tax withholds part of the employee’s salary, they are in possession of an amount that belonged to the employee and which, by law, must be handed over to the federal tax authorities.
The term “collected”, in turn, refers to those situations in which the subject receives a certain amount from a third party and within that amount is the tax due to the tax authorities.
Therein lies the great controversy over the possibility of classifying the conduct of declaring and not paying ICMS as a crime, since the value of the tax is passed on to the buyer in the price of the product.
From the point of view of tax liability, the consumer has no legal relationship with the tax authorities. There are two separate relationships, one under private law, between the trader and the buyer, and the other under public law, between the trader and the tax authorities.
When the trader passes on the financial burden of the ICMS to the buyer, he is not collecting a tax, but rather the price of the goods, so we believe that the expression “tax collected” in the criminal code does not cover this situation.
In principle, there would be no misappropriation, because there is a valid legal agreement between the seller and the buyer in which the latter agrees to pay a certain amount for the goods. At the same time, a second legal relationship arises between the tax authorities and the seller, which obliges the latter to pay the tax. Non-payment would therefore constitute a mere tax default.
The ICMS-ST situation is different, in which there is a legal tax relationship that obliges the buyer (substitute) to pay the tax to the state tax authorities when the goods are resold. In this case, the seller (substitute) effectively collects the tax from the buyer, acting as a mere pass-through to the tax authorities.
In the first case, the buyer has no obligation to pay ICMS to the state. In the second case, the buyer, as a substitute taxpayer, hands over the amount of tax he owes to the seller, who is obliged to pass it on to the public coffers.
In this way, the expression “tax collected” would only apply to ICMS-ST.
However, in deciding that ICMS should not be part of the PIS and COFINS calculation basis, the STF settled on the understanding that ICMS itself, which is included in the price of products, is not part of the taxpayer’s income, but merely circulates through its accounts, constituting a mere cash inflow of value that does not belong to it.
If the ICMS only passes through the accounts and does not belong to the taxpayer, the crime of tax misappropriation is clearly established when the tax is not paid into the public coffers. The tax passed on to the consumer is now classified as “movable property”, which is inherent to the crime.
This controversy was recently discussed by the Third Section of the Superior Court of Justice in the judgment of HC No. 399.109 / SC. By a majority of votes, the Court ruled that the crime had been characterized.
Justice Reynaldo Soares da Fonseca, in casting his vote in favor of the thesis that failure to pay the declared ICMS constitutes the crime of tax misappropriation, used as one of his arguments the fact that the STF had defined that ICMS is not part of the COFINS and PIS calculation basis because it does not constitute company revenue.
In this way, the STF’s celebrated decision ended up serving as a premise for the understanding that the taxpayer’s failure to pay the ICMS duly declared constitutes the crime of tax misappropriation, and further comments on the harmful consequences of this understanding for taxpayers are unnecessary.
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¹BRASIL. Supremo Tribunal Federal, Extraordinary Appeal No. 574.706/PR, Relª Min. Carmem Lúcia, DJe-223, Brasília, 29.09.2017. Available at: <http://www.stf.jus.br>. Accessed on: Aug. 27, 2018
²BRASIL, Planalto Nacional. Law on Crimes Against the Tax Order. Available at:< http://www.planalto.gov.br/ccivil_03/LEIS/L8137.htm>. Accessed on: Aug. 27, 2018
