Changes in taxpayers’ dealings with the tax authorities and administrative courts: Shield 3.0


Many changes affecting taxpayers’ relations with tax authorities and the administrative courts have been introduced as part of the rollout of successive versions of the Anti-Crisis Shield. Under Shield 3.0, which entered into force on 16 May 2020, taxpayers, tax authorities and the administrative courts are emerging from hibernation.

Shield 3.0 (the amending act of 14 May 2020) has repealed regulations suspending or halting time limits for matters including customs and treasury audits, audits and proceedings under the Tax Ordinance, execution of tax obligations, and proceedings before the province administrative courts and the Supreme Administrative Court.

Time limits that did not begin to run due to the hibernation provisions of the 31 March 2020 amendment of the Anti-Crisis Act will begin to run seven days after entry into force of Shield 3.0, i.e. from 24 May 2020. Similarly, time limits that began to run earlier but were suspended under the Anti-Crisis Act will begin to run again from 24 May 2020. In practice, taking into account specific provisions for example of the Tax Ordinance or the Administrative Court Procedure Law, this means that certain time limits could expire as early as 25 May 2020.

It follows that customs and treasury audits, tax audits, and tax proceedings will be continued. Taxpayers can thus expect that as soon as next week, they may be served with tax decisions or summonses during the course of proceedings. New tax audits and tax proceedings will also be initiated.

Reorganisation of the work of the administrative courts

  • Remote hearings

Shield 3.0 introduces a new standard under which the province administrative courts and the Supreme Administrative Court are to conduct remote hearings using devices enabling immediate transmission of image and sound.

As a departure from this rule, the court may decide to hold a hearing with the parties present if it finds that conducting the hearing would not generate an excessive health risk for the participants.

This change will apply during the period when a state of epidemiological threat or state of epidemic declared due to COVID-19 is in force and for one year after cancellation of the last such state.

  • Closed sessions before the province administrative court

Under Shield 3.0, the presiding judge may order a closed session if he or she regards consideration of the case as essential but conducting a hearing could generate an excessive health risk for the participants and a remote hearing cannot be held with simultaneous transmission of image and sound.

This change is not restricted by any timeframe.

  • Closed sessions before the Supreme Administrative Court

In cases where the party filing a cassation appeal has not waived a hearing, or where another party has demanded a hearing, the Supreme Administrative Court may consider the cassation appeal in a closed session if all parties consent to consideration of the case in closed session within 14 days after service of notice of the intention to hear the case in this manner.

This change will apply during the period when a state of epidemiological threat or state of epidemic declared due to COVID-19 is in force and for one year after cancellation of the last such state.

Will these changes benefit taxpayers?

It depends.

An undoubted advantage is that the new provisions represent some solution allowing the courts to function, which carries over to the time when cases are resolved. While some courts in Poland are scheduling hearing on a current basis, the waiting time for consideration of tax cases by, for example, the Province Administrative Court in Warsaw requires great patience on the litigants’ part.

Serious concerns may arise among taxpayers who believe that proper presentation of arguments during a full-fledged hearing may be vital for the success of their case. It could hardly be said that during a videoconference taxpayers will have the same opportunity to freely express their views as they could at a normal hearing.

The Ombudsman also expressed his concerns over the interests of citizens, submitting to the Senate his comments on the Shield 3.0 bill as adopted by the Sejm. Among other things, he objected to the approach of considering administrative court cases in closed session.

According to the Ombudsman, the technical facilities of the given court may determine whether or not constitutional standards are met. The Ombudsman also had doubts about vague wording such as “excessive threat.” He argued that this approach “may constitute a departure from the principle of openness of court sessions set forth in Art. 90 §1 of the Administrative Court Procedure Law, which is an embodiment of the principle of openness of judicial proceedings under Art. 45(1) of the Constitution. It thus deprives the parties to the proceeding of the right to participate personally in trial activities, and thus the right to be heard, which is an essential element of a fair judicial procedure.”

Action at the pre-litigation stage

The changes introduced by Shield 3.0 may limit taxpayers’ ability to present their views to the administrative court. This in turn suggests that increased initiative by taxpayers at the pre-litigation stage is vital.

First and foremost, a ground for discussion with the tax authorities must be sought. In discussions, the taxpayer can sometimes learn what the tax authority expects before it issues an administrative act. Surprisingly, this is not the rule. Such contacts also help build a thread of understanding, and once taxpayers are sensitive to certain issues they can better meet the authority’s expectations, e.g. with the evidence they present. Most optimistically, the taxpayer may simply be in a better position to present persuasive arguments that at least in part satisfy the tax authority. Under that approach, disputes could be resolved almost amicably.

Maksymilian Olejniczak, Tax practice, Wardyński & Partners