When taxpayers fail to pay their tax debts within the deadline, the Public Treasury has a wide range of possibilities to seize goods to enforce collection. Money in cash or in bank accounts, salaries, wages, and real estate are just a few examples. In this post, we will focus on one of the most frequently
When taxpayers fail to pay their tax debts within the deadline, the Public Treasury has a wide range of possibilities to seize goods to enforce collection. Money in cash or in bank accounts, salaries, wages, and real estate are just a few examples. In this post, we will focus on one of the most frequently used tools in recent years: attachment.
Garnishment procedures are very harmful to tax debtors, in addition to their economic effects, because of their commercial and reputational impact. However, in this post we will not discuss the debtor’s situation regarding the Public Treasury, but the other side of the coin: those individuals and companies that receive an order of attachment and must comply with it.
First, we must consider the risks of breaching an order of attachment. The main one is the risk of allocation of liability, as section 42.2.b) of the Spanish General Taxation Act (Ley General Tributaria) declares those persons or companies that breach an order of attachment liable for payment of the tax debt, if there has been fraud or negligence. This is a type of joint liability, which means that the Public Treasury can interchangeably target the main debtor and the party that is jointly liable, and even bring action for collection against them both.
Consequently, given the risk of allocation of liability, any party that receives an order of attachment should take extreme care when dealing with it.
Keep in mind that, by means of an order of attachment, not only those claims invoiced and pending payment are seized, but also those pending invoicing, those requiring no invoicing, and those derived from services or goods not provided but that arise from a contract in force on the date the order is received. Consequently, after an order of attachment is received, no amount must be paid to the tax debtor, and on the due date, the claim must be paid to the Public Treasury (up to the amount specified in the order). Also, take into account that, if the recipient of an order of attachment pays no amount to the Public Treasury, it will very often serve subsequent summons to find out what happened between the tax debtor and the recipient of the order.
Moreover, it is often the case that both parties (the tax debtor and the recipient of the order) are mutual debtors and creditors. In this case, the recipient of the order cannot claim before the Public Treasury that it is a debtor but also a creditor of the taxpayer, unless the debt has been cancelled as a result of an offset before the order is received.