The “reform of the Italian tax system,” introducing amendments to the Taxpayer’s Bill of Rights through Legislative Decree 219/2023, has had a significant impact on the relationship between taxpayers and the tax authorities. It has sparked an intense debate among legal professionals regarding the proper management of the investigative phase aimed at assessing a higher tax burden by the Tax Administration.
Indeed, as a result of the legislative changes, starting from 2024, the so-called principle of preventive dialogue (contraddittorio preventivo) has been generalized and made applicable to the vast majority of tax assessments, with a few exceptions.
This principle, now enshrined in the new Article 6-bis of Law No. 212/2000 (the Taxpayer’s Bill of Rights), means that the Revenue Agency is now obliged to engage in a genuine and meaningful dialogue with the taxpayer before issuing a tax assessment.
In practice, this principle is implemented through the notification of a specific document to the taxpayer, called a draft assessment (schema d’atto), which must outline the estimated amount of tax due and, more importantly, the factual and legal reasons justifying the potential tax claim.
Upon receiving the draft assessment, the taxpayer is required by law to choose among several options, each with different consequences in terms of the final assessment and any potential litigation.
Specifically, the taxpayer has the following options:
- Submit observations (defensive briefs) within 60 days of receiving the draft (unless the tax office grants a longer period). This allows the taxpayer to provide elements that the office is required to consider before possibly issuing a final tax assessment. Based on what the taxpayer submits—and, crucially, how the legal and factual arguments (which may prevent, modify, or nullify the claim) are presented—the Revenue Agency may either drop the case or issue a tax assessment. However, if it does proceed, the Agency must expressly address the taxpayer’s arguments in its reasoning, under penalty of nullity of the final assessment.
- Submit a request for a tax settlement procedure (accertamento con adesione) within 30 days of the draft’s notification, i.e., initiate a process aimed at reaching a preliminary settlement of the dispute. If no agreement is reached, the Revenue Agency will issue a formal assessment. (If the taxpayer does not file for the settlement procedure within 30 days, it may still be requested after the final assessment is notified, within 15 days of receiving the formal notice.)
- Request access to the case documents within 60 days of receiving the draft. This provision allows the taxpayer to obtain copies of the documents held by the Revenue Agency that were used to formulate the tax claim.
The Importance of Strategic Decision-Making
“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” — Sun Tzu
The procedure established by the new Article 6-bis of Law 212/2000 now revolves around strategic decisions that the taxpayer must make quickly upon receiving the draft assessment. This has had the effect of “forcing” taxpayers and their advisors to adopt a proactive and strategic approach from the outset, taking into account the possible evolution of the case both during assessment and in court.
To give a clearer picture, it becomes immediately apparent that it is crucial to:
- Thoroughly understand the relevant tax laws and case law;
- Identify (and define) the object of the tax claim and any potential procedural or substantive flaws;
- Decide:
- Whether to submit well-structured and legally sound arguments in response to the draft in hopes of getting the claim dropped;
- Whether those arguments could influence the motivation behind the final assessment, helping to shape the narrative of the claim the taxpayer may later have to defend against in court;
- Whether such arguments could inadvertently strengthen the Revenue Agency’s case, thereby having the opposite effect of what the taxpayer intended;
- Whether, in cases where the claim is partially justified, it may be better to pursue an early settlement with the tax office.
Conclusion
The draft assessment forces the taxpayer to abandon a passive and reactive approach to the pre-assessment phase. It becomes essential to rely on a team of professionals who can provide, from the earliest stages:
- A thorough understanding of the opportunities and risks inherent in the draft assessment (and thus in the entire assessment process);
- A detailed and well-timed strategy, both in terms of the content and timing of all actions and decisions, to best manage the relationship with the tax authorities.
Paratore & Partners, applying its legal method, assists businesses and individuals in developing tailored strategies that help clients seize the opportunities created by the new dialogue system, while managing and minimizing associated risks, with the ultimate goal of maximizing their chances of success from the very beginning.
