An unfavourable judgement from a court of first instance can be appealed against by tax authorities to the Supreme Administration Court (NSA). The tax authorities can also lodge appeals in obvious matters.  The budget incurs the costs of lawsuits lost by the tax authorities.

Tax authorities are actively exercising their right to appeal against unfavourable rulings issued by regional administrative courts (WSA).  For example, in the year 2008 the Financial Chamber of the Supreme Administration Court took in 886 cassation appeals from public administrative authorities (out of 4368 cassation appeals in total).  The attorneys of taxpayers show that tax authorities are sometimes too eager in exercising their right to the court.  Appeals against sentences are finding their way to the Supreme Court of Administration in obvious matters, where courts are consistently refusing to accept tax authorities' claims.  For citizens who have won a dispute before the lower court, this means that their case will be prolonged.  Furthermore, the costs associated with lost cases will have to be covered by all taxpayers.  The tax authority has the same rights as the taxpayer in cassation courts.  Therefore, why shouldn't it take advantage of them.

– The administrative judiciary is a two-tier system and a regional administrative court ruling may be appealed to the Supreme Court of Administration by either party – explains Stanisław Walenta, a counsellor at law and tax advisor with Krawczyk & Partners Law Office. 

The activity of tax organs also doesn't surprise Marta Ignasiak, a tax adviser with the law office FKA Furtek Komosa Aleksandrowicz.  It is hard to wonder at the approach of the tax authorities in a situation, when regulations are vague, and the judicature of the courts varies.  However, is the tax authority not abusing its rights? 

According to experts, sometimes yes.  Particularly in that criticism is being addressed to the authorities from the courts themselves.  An example may be the collection of VAT tax on the theft of electricity.  Andrzej Zubik, tax adviser from PricewaterhouseCoopers, notices that the number of appeals against the rulings of tax authorities has increased dramatically over recent years.

– Tax authorities have the status of a party in court-administrative proceedings equal to those of the taxpayer and are eagerly exercising this right – he says. 

Furthermore, Gerard Dźwigała, counsellor at law, tax advisor and partner in the law office of Dźwigała, Ratajczak & Wspólnicy notices that the freedom of taking decisions regarding the application of appeal is much greater with tax authorities than with taxpayers.

A tax authority can also appeal an unfavourable ruling of the lower court to the Supreme Court of Administration.  Tax authorities are also filing appeals against sentences in obvious matters.  The state budget bears the costs of lawsuits lost by tax authorities.

Costs to the budget

As it turns out, the reason is straightforward and prosaic: money.  As Marta Ignasiak underlines, costs associated with continuing the dispute do not burden office workers personally.  Furthermore, resignation from appealing rulings unfavourable to the tax authority can influence the assessment of their work and possibilities of professional development.

– I haven't encountered a case in which the tax authority gave up on an appeal due to reimbursements of costs of the representation during a trial – stresses Gerard Dźwigała. 

Prolongation of cases

According to Ryszard Brudkiewicz, a counsellor at law with the law office of Brudkiewicz, Musiał, Suchecka i Partnerzy, a bigger problem than the payment of costs by taxpayers is the time needed to rule in cases. 

In cases where the tax authority supports appeals, omitting earlier Supreme Court of Administration decisions that were beneficial for taxpayers, the ongoing uncertainty of the taxpayer in respect to the scope of applicable law is a more considerable problem than the level of expenses to the budget.

– It is hard to explain to a customer that despite numerous beneficial rulings in similar matters this issue will last for several years.  Particularly in that possible adjudged costs in rulings won't make up for the incurred costs of legal aid and the time invested by the taxpayer – Ryszard Brudkiewicz points out. 

Also Andrzej Zubik regrets that the tax authorities does not take into consideration rulings that are contrary to its position in similar cases and continue disputes up to the last level even when a legal position has already been formed by administrative courts.

– The negative effects of such action are not only the prolongation of proceedings and increasing costs of tax authority operations, but above all immeasurable losses in relations with taxpayers – he stresses. 

Such action effects the confidence of the taxpayer in respect to the tax authorities as well as faith in their impartiality, it also doesn't demonstrate their professional treatment of taxpayers. 

Stubbornness of the tax authority

According to Ryszard Brudkiewicz, consideration should be given to implementing a rule of tying tax authorities with Supreme Court of Administration rulings issued in similar matters as well as constructing the law in such manner that appeals may only be filed in extraordinary cases.  Marta Ignasiak points out that the duty of bearing the cost by the losing party is the essence of the guarantee of justice and is aimed at reducing litigiousness, i.e. continuing a dispute in an unjustified situation.  Of course it isn't possible to deny the tax authorities the right to court.  Laws are vague, judicature often divergent and unfortunately varied.  As an example, a change in the position of the Supreme Court of Administration regarding the deadline for the issuance of tax interpretations should be noted.  The stubbornness of the tax authorities is fully justified in ambivalent matters, however, one cannot tolerate such in obvious matters, where the tax authority wants to break open already open doors.

author: Aleksandra Tarka, Gazeta Prawna