Taxpayers who show a tax overpayment, if they do not have any arrears or current tax liabilities, have the possibility to request that it be refunded or credited to “future taxes”.
This is indicated by Article 76 § 1 of the Tax Ordinance, according to which: “Overpayments, together with their interest, shall be credited ex officio against tax arrears with interest on arrears, interest on arrears from tax advances not paid on time, reminder costs and current tax liabilities, and in the absence thereof, shall be refunded ex officio, unless the taxpayer applies for the overpayment to be credited in whole or in part against future tax liabilities.“
The above regulation draws our attention to several important aspects.
First of all, it should be pointed out, as confirmed by the judgment of the Supreme Administrative Court of 5 April 2022 (file reference number II GSK 1040/19), that in a situation where a given taxpayer has certain tax arrears or current liabilities, such an overpayment is automatically credited against them and cannot be returned in cash. Similarly, it was indicated in the ruling of the District Administrative Court in Gliwice of 29 April 2021. (file reference number I SA/Gl 186/21), where it was stressed out that: “The refund of an overpayment in money (and thus allowing the taxpayer to dispose of this amount and allocate it for any purpose) is only permissible if the taxpayer does not have tax arrears, interest as referred to in this provision or does not have current tax liabilities.“
In view of the above, it should be stated that, in the first instance, overpayments, together with their interest, shall be credited ex officio against:
- tax arrears plus interest on arrears,
- interest on arrears in respect of tax advances not paid on time,
- reminder costs and
- current tax liabilities.
Thus, it is only in the absence of circumstances such as those mentioned above that the overpayment is refunded. Such reimbursement may, however, be excluded in the event that the taxpayer applies for the overpayment to be credited in whole or in part against future tax liabilities.
In practice, the tax authority ex officio examines the status of the taxpayer’s liabilities at the particular tax office where such overpayment was generated. The regulations, however, do not impose an obligation to search for other existing tax arrears, as confirmed in the judgment of the Supreme Administrative Court of 8 April 2016 (file reference number II FSK 79/16).
When analysing the subject scope of Article 76 § 1 of the Tax Ordinance, i.e. determining to which future liabilities the overpayment that has arisen may be transferred, reference should be made to Article 21 § 1 point 1 and 2 of the same Act, which indicates that a future tax liability is a liability that has not yet arisen, but, given the existing state of affairs, can be expected to arise.
At the same time, tax liability itself is defined in Article 5 of the Tax Ordinance, where it is deemed to be: “(…) the obligation of a taxpayer arising from a tax obligation to pay to the State Treasury, a province, a district or a municipality a tax in the amount, at the time and in the place specified in the provisions of the tax law.“
Thus, overpayments of tax liabilities can be transferred to future tax liabilities. It is not possible to transfer them towards other liabilities, e.g. arrears of social security contributions or real estate tax (in relation to VAT or CIT overpayments). This is because authorities other than tax authorities (heads of tax offices) are competent to collect them, and the Tax Ordinance does not provide for a procedure for “crediting” an overpayment between different authorities or state institutions. Such a view was presented by the Supreme Administrative Court in its resolution of 27 March 2017 (file reference number I FPS 9/16). It is only possible to seize such an overpayment by way of administrative enforcement.
In addition, this standpoint is confirmed, for example, by the judgment of the District Administrative Court in Olsztyn of 21 July 2021. (file reference number I SA/Ol 397/21): “It follows from the wording of the provisions of the Tax Ordinance that they only regulate the principles of crediting overpayments relating to tax liabilities to tax liabilities or arrears. However, they do not refer to cases in which a tax overpayment is credited to liabilities of a non-tax nature.“
At the same time, the entity applying for the transfer of the overpayment towards a future tax liability may act towards it not only as a taxpayer, but also as a remitter and collector, as indicated by Article 76 §3 of the Tax Ordinance.
What is more, it should also be emphasised that there will be no problem with crediting the overpayment towards obligations under certain tax liabilities even in a situation where the office responsible for settling this tax will be an office other than the one which, as a rule, is competent for settlements of a given taxpayer – the provisions of the law do not contain such limitations in this respect. Nevertheless, it is necessary to indicate towards which liability we want to credit the overpayment in question.
It is worth emphasising here that such a position is confirmed, for example, in the judgment of the District Administrative Court in Rzeszów of 18 June 2009 (file reference number I SA/Rz 48/09) where it was indicated that: “Since the prerequisites for crediting the refund occurred in the case, there were no grounds for the tax authority to evade taking action on the taxpayer’s application, due to the fact that the crediting of the refund concerns tax liabilities existing with another tax authority. A taxpayer cannot suffer the negative consequences of such an organisation of the tax apparatus which prevents him from exercising his statutory rights and puts him in a worse position than those taxpayers for whom a single tax authority is locally competent for both income tax and value added tax settlements.“