In which cases does the tax authority pay interest and in which cases does it not?

The law establishes that the tax authority must refund to taxpayers any money paid in excess or paid by error,provided that the taxpayer requests the refund and demonstrates that it is indeed owed to them.

Article 22-A of the Federal Tax Code states that when the authority refunds amounts paid unduly, the taxpayer is entitled to receive interest. This interest is calculated from the date the taxpayer filed a legal defense to claim said refund.

This occurs, for example, when the tax authority initially denies the refund of a credit balance or an undue payment,and the taxpayer contests that decision. If, after following the corresponding legal procedures, a final and favorable ruling is obtained, the authority must refund the original amount, updated for inflation, and additionally pay interest.

However, a different case was recently resolved.

On Monday, March 2, the Plenary of the Supreme Court of Justice of the Nation (SCJN) resolved a contradiction of legal thesis and determined that the payment of interest does not apply when a judgment only declares the nullity of a tax assessment that has already been paid, but does not expressly order its refund or the payment of interest.

This means that if a taxpayer paid a tax assessment and subsequently the Federal Court of Administrative Justicedeclares that credit as null, but the judgment makes no mention of the refund or the interest, the taxpayer will have to initiate another administrative procedure to request the refund of the money paid unduly and prove their entitlement.

On the contrary, if during the trial the taxpayer expressly requested the recognition of their right to the refund of the undue payment and also requested the payment of interest, then the Court could rule on that right and order its payment.

At Baker Tilly, we have a team of specialized lawyers in the recovery of credit balances and undue payments, who support companies in the defense of their interests before tax authorities and courts.