Tax Debt Prescription

The Tax Code (Código Tributario) sets two periods. The general rule is three years counted from the expiration of the legal deadline to pay the tax (Article 200). That period extends to six years in the case of taxes subject to filing where no return was filed, or where the return filed was maliciously false. The Treasury’s collection action to pursue payment prescribes within the same periods (Article 201). It is worth checking the exact due date of each assessment or tax, because prescription runs separately for each debt and may have been interrupted or suspended.

In tax matters, the court can declare prescription on its own motion when hearing a challenge, but in practice it is always advisable to raise it expressly, either as a defense in the executive collection proceedings pursued by the General Treasury of the Republic (Tesorería) or as an argument before Chile’s Internal Revenue Service (SII). It is not enough for the debt to be old: prescription must be invoked, and it must be shown that the period under the Tax Code (Código Tributario) ran its full course without a valid interruption. That is why it is advisable to review the case file before the debt leads to attachments or other coercive measures.

The first step is to request a breakdown of the debt from the General Treasury of the Republic (Tesorería) or Chile’s Internal Revenue Service (SII) and identify the due date of each item. If the three or six year periods of the Tax Code (Código Tributario) elapsed without valid acts interrupting them, prescription can be raised. When collection is pursued through executive proceedings, prescription is asserted as a defense within the period the law allows once the demand for payment has been served. Acting in time is key, because letting the procedure advance can mean attachments or the withholding of refunds.

Yes. Tax prescription is interrupted, among other cases, by the taxpayer’s written acknowledgment or undertaking, by the administrative notification of an assessment or tax determination, and by a judicial demand for payment. When interruption operates, the time already elapsed is lost and a new period begins to run. Suspension is different: it only freezes the count while a given circumstance lasts, after which it resumes. For that reason, before raising prescription it is worth checking whether there were notifications, partial payments, or acknowledgments that interrupted it, under the rules of the Tax Code (Código Tributario).

Monetary penalties and interest tied to a tax generally follow the fate of the principal obligation and prescribe within the same three or six year periods of the Tax Code (Código Tributario), counted from the date they became due. Fines that are not tied to the payment of a tax have their own prescription rules. Since the calculation depends on the type of obligation and the date of each assessment, it is worth reviewing the debt item by item, because it is common for part of the debt to be time-barred while another part is not.

Prescription of debts owed to the Chilean State (Fisco) is governed by the special rules of the Tax Code (Código Tributario): three or six years, with their own grounds for interruption and suspension. Debts between private parties, such as a consumer loan or a promissory note, are governed by the Civil Code (Código Civil) and by commercial rules, with different periods depending on the type of action (for example, the executive action has a shorter period than the ordinary one). That is why a bank debt and a tax debt, even if they are equally old, can be in different prescription situations. Each case should be analyzed under the rules that apply to it.