Tax Dispute - Three Instances, Strict Deadlines and an Assessment That Doubles With the Penalty
A tax assessment is not final: it is an administrative act that can be appealed through three instances, and in practice a significant share of assessments is cancelled in whole or in part. But a dispute has its own rules: the deadline at every stage is short and missing it makes the assessment final; the appeal is written in a specific structure, not in the format "we disagree"; and interest accrues for the whole length of the dispute, which raises the price of a lost one.
This page describes the mechanics of a dispute: which instance decides what and within what time, how compulsory enforcement is suspended during the dispute, how an appeal that wins is written, who proves what, when expert evidence is needed, what a dispute costs and when the lawyer advises a settlement instead. Accompanying the audit, during which the basis of the dispute is created, is on a separate page.
Updated · Practice area: Tax lawyer
Where an Assessment Is Appealed - Three Instances and How They Differ
A tax dispute passes through a two-tier administrative system before reaching court, or goes to court directly. The choice and the sequence are a matter of strategy.
Running a Dispute - From the Act to the Final Decision
Analysing the assessment and the defence strategy
Each item of the act separately: a factual error, misapplication of a rule, a procedural breach, limitation, a calculation error. The lawyer determines which item is won where (a technical error at the Revenue Service, interpretation at the council or in court) and which should be settled.
A deadline calendar
From the day the act is served, the deadline for each instance, the possibility of extension and restoration, the accrual of interest, the question of suspending enforcement. One missed deadline makes the assessment final, and interest is counted every day.
Drafting the appeal
A structure for each assessment: what was assessed, under which rule, why wrongly (fact and law), on which evidence, what the correct calculation is. Legal argument with court practice and council decisions; an alternative calculation with the accountant, since the court requires figures for a "partial" cancellation.
Suspending enforcement
Starting the dispute within the deadline generally suspends compulsory recovery of the disputed sum; in certain cases the tax authority requires security (a bank guarantee, attachment of property). The lawyer deals with suspension together with the appeal so that accounts are not frozen.
Evidence and expert reports
Documents, counterparty confirmations, an auditor's opinion, accounting expertise on the calculation, a market-price valuation for related parties. The burden of proof is shared: the tax authority proves the basis of the assessment, the taxpayer the reality of the expense and the right to the credit.
Hearing and decision
Oral presentation of the position at the council hearing; a full process in court. After the decision: implementation (cancellation of the assessment, refund of overpayment) or an appeal to the next instance within the deadline. At each stage the lawyer reassesses whether continuing is worth it.
When a Dispute Is Worth It and When a Settlement Is - The Calculation the Lawyer Makes After the Act
A tax dispute is an economic decision: the disputed sum, the probability of winning on each item, the length of the dispute and the interest accruing on it, the court fee and the lawyer's costs in court, the terms of suspending enforcement and, often decisively, the criminal risk on a large assessment. After the act the lawyer puts these variables in one table and gives a separate recommendation for each item of the assessment: dispute, amend, settle.
A dispute is worth it when the position is documentarily solid (the expense is real, the credit is lawful, limitation has expired, procedure was breached) or when the question is one of interpretation and council or court practice exists in the taxpayer's favour. Disputing the penalty and interest is often worth it even when the principal is not in dispute: the amount of the penalty and the grounds for reducing it are a separate question.
A settlement is worth it when the position is weak, the sum exceeds the criminal threshold, or the years of dispute and security over accounts cost the business more than paying the reduced sum. A settlement is final: afterwards neither a dispute nor a refund is possible; so the lawyer recommends a settlement only after a full analysis of the assessment and documents its terms precisely (which period and tax are closed, the criminal consequence).
The Numbers a Tax Dispute Turns On
- Administrative appeal deadline
- A short statutory period from service of the act or tax demand, within a month; missing it makes the assessment final. The period runs from the day of service, not the date of the act; proof of service must be kept.
- Council and court deadlines
- After each decision, a new period for appealing to the next instance, on the same logic. The lawyer counts from the day the decision is served and does not leave the appeal to the last day.
- Interest during the dispute
- A dispute does not stop interest: it is counted every day on the disputed sum; cancelled on a win, added on a loss. A long lost dispute materially increases the assessment.
- Court fee
- The administrative stages are free; in court the fee depends on the disputed sum, within limits, and is borne by the respondent on a win. The fee is part of the economic calculation of the dispute.
- Limitation on assessment
- An assessment only within the limitation period, typically 3 years, in certain cases longer. An assessment for a time-barred period is void in itself and is the first point of the appeal.
- Refund deadline
- A refund of overpaid tax within the same limitation period; an application with documents, and a refusal is appealed through the same system. A refund often "triggers" a tax audit; the lawyer plans for it in advance.
What the Lawyer Needs to Draft the Appeal
- The audit act, the tax demand, the calculation of the assessment, with proof of service, for counting the deadlines.
- The disagreement protocol, if one was submitted, and every document produced during the audit with handover acts: what the auditor saw and what they did not.
- Primary documents for each item of the assessment: contracts, invoices, acts, payments, counterparty details; evidence of reality and basis.
- Accounting records and returns for the period, an alternative calculation with the accountant, for a "partial cancellation" in figures.
- Acts of previous audits on the same issues, written explanations and replies from the Revenue Service: the argument of consistency and good faith.
- Council and court practice on similar issues; the lawyer will research it, but known precedents in the industry are useful.
Three Tax Disputes
A "non-business expense" of 340,000 lari
The Revenue Service treated marketing and consulting costs as a deemed distribution and assessed profit tax with a penalty. Lawyer: the economic justification of the expense (campaign results, sales growth, consultants' reports), council practice, an alternative calculation. The council cancelled 85% of the assessment; the rest was settled without penalty.
An assessment for a time-barred period
The act assessed 4 years, the first of which was time-barred; the Revenue Service relied on a ground for extending the period. Lawyer: proof that no ground for extension existed, limitation as the first point of the appeal. The first year's assessment was cancelled already at the first administrative stage: 40% of the whole sum.
A dispute that should not have started
The director wanted to appeal a 1.2 million assessment in full; the position was strong on three items, weak on two, and above the criminal threshold. Lawyer: a calculation table, a settlement on the weak items with a reduced penalty and the criminal risk closed, a dispute on the strong ones. Settlement on 400,000; the dispute on 800,000 won at the council. A full dispute would have meant a loss and an investigation.
Questions About Tax Disputes
Does an appeal automatically stop money being debited from the account?
An appeal filed within the deadline generally suspends compulsory enforcement of the disputed sum until the dispute ends, but interest accrues, and in certain cases (risk criteria, a large sum) the tax authority requires security. An appeal filed late or to the wrong body suspends nothing. The lawyer deals with suspension together with the appeal.
The Revenue Service refused at the first stage. Is the council worth it?
Yes: statistically the council changes the Revenue Service's decision in a significant share of cases, especially on questions of interpretation; the Revenue Service rarely cancels its own assessment. The council holds a hearing with an oral position; the lawyer's preparation is most valuable for exactly this stage. The council's decision can also be appealed to court.
I agree with the assessment but not with the penalty and interest. Can I appeal only those?
Yes: the amount of the penalty, the grounds for reducing it (a small understatement, an amendment, a first breach) and the calculation of interest are separate questions that can be appealed while the principal is accepted. Often that part is half the assessment. Paying the principal stops interest; the lawyer advises that step alongside the dispute on the penalty.
How long does a tax dispute take?
The administrative stages each within a statutory period, a few months in total; the courts through three instances, 1-3 years. Interest is counted for all of that time, so the lawyer often advises paying the principal and continuing the dispute: on a win the sum comes back with interest.
We concluded a settlement and now see the assessment was wrong. Can we appeal?
No: a tax settlement is final and excludes a dispute for the period and tax it covers. That is exactly why a settlement must be preceded by the lawyer's full analysis of the assessment, and why the settlement must state precisely what is closed and what is not, so that an uncovered period does not come back later as a separate assessment.
Lawyers for Tax Disputes
A tax dispute is won on deadlines, the structure of the appeal and an economic calculation of the positions: which instance, which item, and which to settle. Within 15 minutes the coordinator connects you with a lawyer who handles tax disputes before the Revenue Service, the council and the courts.
No published lawyers in this category yet
That does not mean we cannot help. Call us - we will match you with a specialist for a remote consultation or from a nearby city.
Call: 568 330 318Other Tax Law Services
An Assessment Has Been Served and the Clock Is Running?
In a free consultation the lawyer tells you which part of the assessment can be appealed and where, what deadline you have today, whether enforcement is suspended, and what is more economical: a dispute or a settlement. The coordinator phones you within 15 minutes.