The Incidence of IRPJ and CSLL on Undue Taxes Arising from Judicial Decisions

Abstract

The purpose of this article is to discuss when a revenue from court decisions recognizing undue taxes should subject to income taxation. To do so, it starts with the understanding set forth by the IRS in the Interpretive Declaratory Act n. 25/2003, in the sense that the revenue must be recognized at the res judicata, to present obstacles to this position from four different orders, related to (i) the inexistence of value definitiveness as long as there are legal measures in progress; (ii) the lack of certainty arising from the simple expedition of the precatory; (iii) the lack of ability to pay over the mere expectation of payment; and (iv) the lack of congruence between the IRS understanding and the public accounting rules.