Taxes are economic values levied by the state on real and legal persons in order to finance public services. However, various disputes may arise between the tax administration and taxpayers at the stages of tax assessment (calculation), notification (notification) or collection (collection). These disputes are called “tax disputes”. Tax disputes are subject to special judicial procedures in order to protect the rights of taxpayers and to control the legality of the transactions of the tax administration. In Turkey, tax disputes are resolved in Tax Courts within the scope of the Administrative Procedure Law No. 2577 (İYUK).
Legal Framework: Basic Principles of Tax Law and Adjudication
One of the fundamental principles of tax law is the “principle of legality”; in other words, taxes can only be imposed, amended or abolished by law. Administrative judicial remedy is essential for the resolution of tax disputes. Tax Courts are specialised courts in charge of hearing disputes arising from taxes and similar financial obligations.
Administrative Procedure Law – Article 7: Time for Filing a Lawsuit
(1) The time limit for filing a lawsuit is sixty days in the Council of State and administrative courts and thirty days in the tax courts, unless a separate time limit is specified in special laws. (2) These time limits start from the day following the date of written notification in administrative disputes.
Types and Sources of Tax Disputes
Tax disputes generally arise from the following types of actions of the tax administration
- Tax Assessment: The tax administration calculates a tax liability based on the taxpayer’s declaration or ex officio.
- Tax Penalties: Penalties imposed for behaviour contrary to tax laws.
- Payment Order: It is a document sent upon failure to pay the tax debt in due time.
- Seizure and Sale Procedures: Procedures applied to the taxpayer’s assets due to unpaid tax debts.
Application Procedures in Tax Disputes
Taxpayers may also use some administrative remedies before or together with the judicial remedy:
- Correction Request: Taxpayers who believe that there is a tax error may apply to the tax office and request correction of the error.
- Reconciliation: Taxpayers may request “reconciliation” against the tax assessed and penalties imposed as a result of the tax inspection within the period for filing a lawsuit. Reconciliation is an agreement between the tax administration and the taxpayer to resolve the dispute.
- Administrative Litigation (Tax Court): In case of failure to obtain results through administrative means or if it is desired to apply directly to the judicial remedy, a lawsuit is filed with the Tax Court.
Process of filing a lawsuit in the Tax Court
- Period for Filing a Lawsuit: The period for filing a lawsuit in tax disputes is 30 days from the day following the date of notification of the administrative action. This period is forfeitory.
- Preparation of the Case Petition: A petition must be prepared in accordance with Article 3 of the İYUK. In the petition, the administrative action to be cancelled, legal grounds and evidence should be clearly stated.
- Request for Stay of Execution: A “stay of execution” may be requested if the implementation of the administrative action subject to the lawsuit will cause irreparable or impossible damages.
- Competent and Authorised Court: The competent court is the Tax Court. The competent court is the Tax Court in the place where the taxable event occurs or in the taxpayer’s place of residence.
- Judicial Process: In administrative judgement, the judgement is generally made through the file. The court checks the conformity of the administrative act with the law.
Tax disputes are legal problems that may have significant financial consequences for taxpayers. In order to protect the rights of taxpayers against the actions of the tax administration, it is possible to file a lawsuit in Tax Courts. The fact that the period for filing a lawsuit is as short as 30 days is of vital importance in order not to miss the legal deadlines. Therefore, getting professional legal support from a tax law attorney in tax disputes is essential for the correct management of the process.