Brazil: Prescrição de Dívida Tributária: É Possível “Cancelar” um Débito Fiscal Antigo?

What are Tax Debts?

💡 Important Tip: Besides prescription, you can use tax compensation to settle debts with tax credits your company holds. This is a complementary strategy that can significantly reduce your tax liabilities.

Also read: secure tax compensation | how to use tax credits | PER/DCOMP | defense against tax infraction notices | TDPF from Receita Federal

Tax debts are financial obligations that companies and individuals have with the government, arising from taxes not paid within the legal deadline. Taxes can be in the form of taxes, fees, or improvement contributions. When a tax is not paid, it becomes a tax debt, subject to additional charges such as interest and fines. These debts can negatively impact a company’s financial health and, in extreme cases, lead to legal proceedings and asset seizure.

📅 Last verification and update: 08/10/2025

In Brazil, tax debts are managed by the Receita Federal and competent state and municipal bodies, depending on the type of tax in question. Failure to pay taxes such as Income Tax, ICMS, ISS, and social security contributions can result in tax debts. These debts not only affect a company’s liquidity and investment capacity but can also harm the business owner’s reputation in the market.

Moreover, tax debt can be transferred to the company’s partners, especially in cases of irregular dissolution or fraud. This means that even after business activities have ceased, partners can be held liable for the payment of due taxes, putting their personal assets at risk. Therefore, proper management of tax obligations is essential for the stability and sustainable growth of any business.

Legal support is essential to validate tax prescription.

What is Tax Prescription and Why Does It Exist?

Prescription is not a “forgiveness” of the debt but rather the loss of the government’s right to judicially collect a tax debt due to the passage of time. It exists to ensure legal certainty (Art. 174 of the National Tax Code), preventing taxpayers from being indefinitely under the threat of collections. Understanding this concept is crucial to assess whether that old debt still appearing in the company’s reports may indeed be extinguished.

Types of Tax Debts That Can Be Canceled

Not all tax debts are subject to prescription. Some tax obligations have specific characteristics that can influence their prescription period. Generally, debts arising from taxes, contributions, and fees are subject to prescription, provided that the established legal conditions are met.

Federal taxes, such as Income Tax, IPI (Tax on Industrialized Products), and social security contributions, follow the general prescription rule of 5 years. Similarly, state taxes, such as ICMS (Tax on the Circulation of Goods and Services), and municipal taxes, such as ISS (Service Tax), are also subject to this prescription, except for specific exceptions.

However, there are situations where the prescription period can be suspended or interrupted, as occurs in administrative or judicial proceedings. In these cases, while the process is ongoing, the prescription period is suspended, resuming its count only after the process is concluded. It is essential for taxpayers to be aware of these nuances to correctly assess the possibility of prescription of their debts.

The 5-Year Rule in Practice: Prescription for Collection vs. Intercurrent Prescription

Although everyone talks about the “5-year rule,” there are two crucial moments where prescription can occur, and the difference between them is fundamental.

• Prescription of the Collection Action: Refers to the 5-year period the government has to initiate tax execution after the definitive constitution of the debt (e.g., after the end of an administrative process). If the government takes more than 5 years to file the collection, the debt prescribes.
• Intercurrent Prescription: Occurs within the tax execution process. If, after the action is filed, the process remains inactive for more than 5 years due to the government’s inertia or exclusive fault (e.g., not finding the debtor’s assets and “forgetting” the process), the debt can also be declared prescribed.

Attention: What Interrupts the Prescription Period and Resets the Clock?

This is the most critical point where most amateur analyses fail. The 5-year period is not necessarily continuous. The law provides for various situations that interrupt the prescription count, resetting the clock and starting the count from the beginning. The main acts that “keep the debt alive” are:

• The Judge’s Order for Citation: When the judge accepts the tax execution, the period is interrupted.
• The Protest of the Active Debt Certificate (CDA): Even before the judicial action, the protest of the debt at a notary office already resets the clock.
• Any Act by the Debtor that Acknowledges the Debt: The most common trap. If the company adheres to a installment program, it is confessing the debt and interrupting the prescription.
• Any Judicial Act for Collection: If the government requests an account freeze or asset seizure, even if unsuccessful, this can be considered an act that interrupts the process’s paralysis.

Tax debts can prescribe after a certain legal period.

How to Identify if Your Debt is Prescribed

Identifying if a tax debt is prescribed requires a careful analysis of tax documents and the tax payment history. The first step is to check the date the tax should have been assessed and, from that date, calculate the 5-year period, considering any interruptions or suspensions of the prescription period.

For this, it is necessary to have access to tax notifications, infraction notices, and other documents that prove the existence of the debt and the date it was constituted. Additionally, it is important to verify if there was any administrative or judicial process related to the tax collection, as these processes can alter the prescription period.

If the taxpayer identifies that the prescription period has been exceeded, they can request the extinction of the debt with the competent body, whether federal, state, or municipal. This request must be made through a formal application, accompanied by all documentation proving the prescription of the tax credit.

Necessary Documentation for Cancellation

Just like in defense against tax infraction notices, complete and organized documentation is essential to prove the prescription before the Receita Federal.

To request the cancellation of a prescribed tax debt, the taxpayer must gather a series of documents that prove the prescription of the debt. Among the most common documents are the tax assessment notice, infraction notices, collection notifications, and active debt certificates.

Besides these documents, it is advisable to attach a detailed spreadsheet with the calculation of the prescription period, clearly demonstrating that the 5-year period has been exceeded. This spreadsheet should include the tax assessment dates, any interruptions or suspensions of the prescription period, and the final date when the prescription was consummated.

Finally, it is important that the cancellation request is formalized with the competent body, whether the Receita Federal, the State Treasury Department, or the Municipal Finance Department. The taxpayer must file the request and monitor the process to ensure that the debt is effectively extinguished and that there are no more undue charges.

Canceling old tax debts requires legal backing.

Step-by-Step to Request Debt Prescription

The process of requesting the prescription of a tax debt involves several steps and requires attention to detail. The first step is to gather all necessary documentation, including tax notifications, infraction notices, active debt certificates, and payment receipts, if any. A spreadsheet with the prescription period calculation is also essential.

With the documentation in hand, the next step is to draft a formal request addressed to the competent body, whether federal, state, or municipal. This request should be clear and objective, containing the taxpayer’s identification, the description of the debt, and the cancellation request based on the prescription. It is crucial that the taxpayer demonstrates, through calculations, that the 5-year period has been exceeded.

After filing the request, the taxpayer must monitor the process. The competent body may request additional information or complementary documents, and it is important to respond to these requests promptly to avoid delays in the analysis of the request. If the request is accepted, the debt will be extinguished, and the taxpayer will receive a negative debt certificate, proving fiscal regularity.

Consequences of Tax Debt Prescription

The prescription of tax debt brings several positive consequences for the taxpayer. The main one is the extinction of the tax obligation, which means that the government can no longer collect the debt, either administratively or judicially. This provides financial relief and allows the company or individual to better organize their finances and plan for the future without the burden of old debts.

Another important consequence is obtaining negative debt certificates, which are essential for conducting business, participating in public tenders, and obtaining financing. With the prescription, the taxpayer regularizes their fiscal situation and can even recover tax credits through collective actions and gain access to these certificates, which can open new opportunities for growth and development.

Finally, the prescription of tax debts also contributes to the taxpayer’s legal certainty, as it eliminates the uncertainty about the possibility of future collections. This allows companies and individuals to make safer and more efficient planning, without the fear of unpleasant surprises related to old tax debts.

It is possible to legally extinguish old tax debts.

Tips to Avoid New Tax Debts

To avoid the formation of new tax debts, it is essential to adopt a series of good fiscal and financial management practices. The first is to maintain strict control over tax payment deadlines, using management tools and alerts to avoid delays. Paying taxes on time is the best way to avoid interest, fines, and the formation of debts.

Another important tip is to invest in training and constant updates on tax legislation. Tax rules are constantly changing, and it is essential that those responsible for the company’s tax management are always well-informed. Participating in courses, seminars, and workshops can help stay updated and avoid mistakes that result in tax debts.

Additionally, having the support of specialized professionals, such as accountants and tax lawyers, can make a difference in managing tax obligations. These professionals have the technical knowledge necessary to guide the company in the correct calculation and payment of taxes, as well as assist in resolving any conflicts with the government.

The legal period can be the taxpayer’s ally.

An efficient tax planning can prevent the accumulation of tax debts and avoid the need to resort to prescription in the future.

To avoid accumulating new debts while dealing with old ones, it is essential to avoid SPED, ECF, and DCTFWeb fines, keeping up with all accessory obligations.

Final considerations and additional resources

The prescription of tax debts is a powerful tool for regularizing the tax situation of companies and individuals. Knowing the deadlines and procedures necessary to request prescription can result in significant savings and financial relief. However, it is crucial that the taxpayer is well-informed and has the support of specialized professionals to ensure that the entire process is conducted correctly and efficiently.

This article provided a comprehensive guide on how to cancel old tax debts through prescription. We hope the information presented has been useful and that taxpayers feel more secure and prepared to deal with their tax obligations. For those who wish to delve deeper into the topic, we recommend consulting additional sources, such as current tax legislation, specialized publications, and monitoring relevant jurisprudence.

If you are facing difficulties with tax debts or wish to obtain more information about the prescription of tax debts, consider seeking the guidance of a tax lawyer or accountant. These professionals can offer a detailed analysis of your case and assist in developing strategies to regularize your tax situation. Remember: information is a powerful ally in the efficient management of your tax obligations.What are tax debts?

FAQ – Frequently Asked Questions about Tax Debt Prescription

1. What is tax debt prescription? It is the loss of the government’s right to judicially collect a tax debt due to the passage of time. It is not a forgiveness but rather the extinction of the possibility of forced collection, ensuring legal certainty for the taxpayer.

2. What is the general period for the prescription of a tax debt? The general period, known as the “5-year rule,” is provided for in Art. 174 of the National Tax Code. The government has 5 years to initiate judicial collection (tax execution) after the definitive constitution of the debt.

3. What is “intercurrent prescription”? Intercurrent prescription occurs within an existing tax execution process. If the process remains inactive for more than 5 years due to the government’s inertia or fault (e.g., not finding the debtor’s assets), the debt can also be considered prescribed.

4. Is the 5-year period always continuous? What can “reset the clock”? No, the period is not continuous. Various situations can interrupt the count, causing the 5-year period to restart from zero. The main ones are:

• The judge’s order for citation in the tax execution.
• The protest of the debt at a notary office.
• Any act by the debtor that acknowledges the debt, such as adhering to an installment plan.

5. How can I know if a debt of mine has already prescribed? A detailed analysis is necessary. You must verify the date of the definitive constitution of the debt and count 5 years, observing if there were acts that interrupted this period (such as installment plans or the start of a tax execution). The help of a tax lawyer is essential for this analysis.

6. If the debt has prescribed, what do I gain from it? The main consequence is that the debt is extinguished and can no longer be judicially collected. This allows you to regularize your tax situation, obtain Negative Debt Certificates (CND), and plan your finances without the risk of future collections on that debt.

7. How to request the recognition of prescription? You must gather documentation that proves the debt’s date and the absence of interruptions in the period. Then, you need to make a formal request to the creditor body (Receita Federal, State Treasury, etc.) or, if there is a judicial process, ask the judge to declare the prescription.

Besides prescription, your company can recover tax credits through collective actions, recovering amounts unduly paid in the last 5 years.