One of the first measures adopted by the new government, in January of this year, was the promulgation of Executive Order 1,160/23, which reinstated the casting vote as a tiebreaker criterion in judgments by the Administrative Council for Tax Appeals (Carf). The executive order repealed the rule contained in article 19-E of Law 10,522/02, which provided for a decision favorable to taxpayers in the event of a tie in the judgment.

EO 1,160/23 also increased the threshold for voluntary appeals before Carf from 60 to 1,000 minimum wages. Thus, controversies that do not exceed this amount will be decided in the sole and final instance by the Regional Judgment Office (DRJ), without the possibility of taking the dispute to the appellate level of administrative tax litigation, Carf.

Despite producing immediate legal effects, EO 1,160/23 encountered a lot of resistance, both in the Brazilian Congress and in society in general, during its process of conversion into law. The validity period of the executive order - 60 days, extendable for another 60 days - ends on June 1 of this year. Thus far, the text has not been put to a vote, which indicates that the rule will not be converted into law and will cease to have effect.

Presentation of Bill 2,384/23 by the federal government

In this context, the government presented in the Chamber of Deputies, on May 5, Bill 2,384/23 (Bill 2,384/23). Like EO 1,160/23, the bill proposes return of the casting vote as a tiebreaker criterion in Carf judgments. In other words, another attempt to resume the scenario of resolving disputes with the prevalence of the vote of the chairman of the panel.

Bill 2,384/23 contains six articles. Article 1 regulates the proclamation of the result of judgments in the event of a tie, in the same terms as those contained in EO 1,160/23 and with reference to the rule contained in paragraph 9 of article 25 of Decree 70,235/72.[1] Article 5, in line with the first article, expressly repeals the rule in article 19-E of Law 10,522/02 (tie-breaker favorable to the taxpayer).

The other provisions deal with other topics:

  • Article 2 proposes that the Federal Revenue Service make available methods for self-regularization of main and ancillary obligations;
  • Article 3 provides that the Federal Revenue Service must classify taxpayers by degree of tax compliance, based on criteria such as registration regularity; good standing in the payment of taxes due; and accuracy of information provided in returns and bookkeeping, among others;
  • Article 4 brings in the provision, also already contained in EO 1,160/23, to increase the limit of jurisdiction for filing voluntary appeals with the Carf from 60 to 1,000 minimum wages.

This last measure, although it tends to reduce the backlog of cases at Carf, limits access - especially for individual taxpayers and taxpayers with smaller tax debts - to the appellate level of tax administrative litigation, the only one in which the judgment is carried out in equal composition, which allows greater debate on the issues.

As a rule, the processing of a bill takes longer than it does for executive orders, which have a special and faster process, subject to the requirements of relevance and urgency. It goes through subject-matter committees, where the matter is debated by members of congress and there can be further reflection on the subject.

Thus, in view of the forthcoming expiration of EO 1,160/23 and the known longer processing of the bill, the government presented to the Chamber of Deputies, based on article 64, paragraph 1, of the Federal Constitution, a request for Bill 2,384/23 to be processed under an urgent procedure, which dispenses with some internal formalities.

The Chamber of Deputies has 45 days to consider the request for urgency. After this deadline, all other legislative deliberations in the Chamber will be halted, with the exception of those with a constitutionally determined deadline, until the vote is concluded. The Chamber of Deputies has until June 20 to respond regarding the request for urgency for Bill 2,384/23, at the risk of blocking the agenda from the following day.

It is worth remembering that, as of July 18, congressional recess begins, lasting until July 31, as provided for by article 57 of the Federal Constitution.

The fact is that, as of June 1, the rule provided for in EO 1,160/23 loses validity, returning to the previous rule, provided for in article 19-E of Law 10,522/02, which, as mentioned, in the event of a tie vote at Carf, provides for a final decision favorable to the taxpayer.

Proceedings of ADIs 6.399, 6.403, and 6.415 at the STF

It is worth remembering that, at the Federal Supreme Court (STF), direct actions of unconstitutionality ("ADIs") 6.399, 6.403, and 6.415, are being processed, challenging the formal and substantive constitutionality of article 19-E of Law 10,522/02.

The judgment of the ADIs began in a plenary session on March 24, 2022, with a partial score of six votes for the constitutionality of the legal provision questioned. The judgment was interrupted by a request for review of the record by Justice Nunes Marques.

Last May 16, the Justice released the suits for judgment, and they can be scheduled at any time. If the judgment of the ADIs occurs before the approval of Bill 2,384/23, its outcome will define whether the tie-breaker rule in favor of taxpayers with the Carf will continue to be applied.

If Bill 2,384/23 is approved before judgment of the suits, the tie-breaking rule applicable in Carf judgments will be the one provided for in the bill, since it repeals article 19-E of Law 10,522/02.

If EO 1,160/23 expires without being converted

What happens to cases that were judged by the Carf applying the casting vote during the period in which the provisions of the executive order were in force?

In such cases, the Brazilian Congress has the prerogative to issue, within 60 days, a legislative decree to regulate the legal effects generated during the validity of the executive order.

If no such decree is issued, article 62, paragraph 11, of the Federal Constitution provides that legal relations constituted and arising from acts performed during its validity will continue to be governed by what was established in the executive order.

Thus, during the few months of EO 1,160/23, the cases that were judged by the Carf applying the casting vote, in principle, will have their results maintained - even if there are other arguments to litigate the validity of the executive order.

The regulation by Congress is therefore extremely necessary to avoid perpetuating an absolutely unfair situation in the treatment of taxpayers who had their appeals included in the Carf's judgment agenda during the term of the executive order and those who did not have cases included in the agenda during this period. Tie votes would generate exactly opposite resolutions.

Regarding Bill 2,384/23, what is expected?

The urgent procedure indicates that, by the end of the first semester, it is possible to have a position from Congress on this government initiative. Perhaps this will allow for some stability in the administrative judgment environment.

In the dispute over the definition of tiebreaker criteria applicable in Carf judgments, the government entered into an "arm wrestling" contest with taxpayers, contrary to the most recent movements that suggest more dialogue and rapprochement between tax authorities and taxpayers, through self-regularization and tax compliance projects.

Beyond the tie-breaking criteria with the Carf, however, there is much to be rethought in the structure of administrative tax litigation. But that is a scene for the next chapter, or rather, the next article.


[1] Article 25. Decisions on cases demanding taxes or contributions administered by the Federal Revenue Service are assigned:

Paragraph 9. The offices of chairman of the panels of the Superior Tax Appeals Chamber, its panels, and the special panels shall be held by board members representing the National Treasury, who, in the event of a tie, shall have the casting vote, and the offices of vice chairman, by representatives of taxpayers. (Included by Law 11,941/09)