The Guidelines on Recovery

The Guideline on Recovery of the #Tax Administration is an internal guideline on how the tax authorities deal with companies that cannot pay their tax debts. This guideline was updated last month to reflect the #WHOA (Homologation Private Arrangement Act). For previous blogs on the WHOA, please refer to this article.

This guideline on collection is a useful tool for companies that want to #sanitize or #reorganize their #debt, because this internal guideline can also be invoked in court by the tax debtor.

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Adjustments due to WHOA

An article on the WHOA has been added to the Recovery Guidelines. The Internal Revenue Service votes in favor of a WHOA agreement under 3 conditions:

1. the WHOA agreement has been offered in writing and complies with formalities;
2. the Tax Court has been placed in a class that adequately reflects its legal preference;
3. it is likely that the agreement will be homologated by the court.

The amendments to the Collection Guidelines are:

The starting point remains the general policy, including that the Tax Administration receives a double percentage of what unsecured creditors receive; however

1. the Tax Administration takes into account the 20% rule for small SME creditors. Under circumstances, the Tax Administration may then agree to less than a double percentage;
2. the agreement does not have to cover all creditors;
3. the agreement may provide for a conversion of debt into shares, but the Tax Administration logically does not cooperate with a conversion of a Tax debt into shares;
4. if an arrangement not agreed to by the Tax Administration does become homologated, the Tax Administration does not grant a formal waiver but a natural obligation remains and the Tax Administration will set off tax refunds that relate to the pre-homologation period against the claims that have been transformed into a natural obligation.

Incidentally, there is criticism of (in particular) the latter line of action by the IRS, and we wonder whether it will hold up in the #judge.

Sources: Government Gazette 2021, 33908 and FIP Newsletter 2021/30 from Sdu

If you have questions about WHOA as business owner , as a debtor or as a creditor, please contact Erik Jansen or Reinier Pijls.