TAX and AMPARO. Amparo Lawsuit against the modifications for the deduction of Non-recoverable Debts December 14, 2021
On November 12th, 2021, the Decree that amends several provisions, among others, the article 27, section XV, subsection b) of the Income Tax Law (ITL) was published in the Official Gazette of the Federation (OGF), which establishes modifications in the requirements for the deduction of non-recoverable debts whose principal amount in its due date is greater than 30,000 units of investment (UDIS). Such modifications will enter into force on January 1st, 2022.
The aforementioned provision warns that, it is considered that there is a notorious practical non-recovery, among others, when in the case of credits whose principal amount in its due date is greater than 30,000 UDIS, the creditor complies with the following: (i) obtains a definitive resolution which proves that the necessary recovery efforts were exhausted, or (ii) when applicable, it is proven that the enforcement of the resolution was not possible.
It is important to state that the referred provision is related to the last paragraph of the subsection a), section XV, article 27 of the ITL, therefore, the creditor must also comply with the following requirements: (i) inform by written notification to the corresponding debtor that he will deduct the non-recoverable debt for income tax purposes, in order for the debtor to accumulate the income that results from the non-covered debt, and (ii) inform the tax authorities no later than the 15th of February of each year the non-recoverable debts that were deducted.
When complying with the referred requirements, it will be considered that there is a notorious practical non-recovery and thus, the corresponding debt will be non-recoverable.
We consider that article 27, section XV, subsection b) of the ITL will result in a negative impact on the deductibility of the non-recoverable debts, violating various human rights to the detriment of the taxpayers (i.e. creditors), since there are occasions in which it is not even possible to summon the debtor to trial due to disappearance or non-localization, which could result in the absence of a definitive resolution that prove that the recovery efforts were carried out.
In order to proceed with the deduction of non-recoverable debts that are greater than 30,000 UDIS (MXN $ 212,366.25), the claim filed against the debtor for lack of payment will not be sufficient. The creditor will also have to obtain a definitive resolution in which it is proven that the recovery efforts before the debtor were carried out or, as the case may be, prove that it was impossible to execute said resolution, regardless of the other requirements stated in such provision, or else, such scenario will not be considered as a notorious practical non-recovery.
It will be necessary to review and analyze the status regarding the non-recoverable debts that overrun the referred threshold and also, those claimed to the debtor for lack of payment and, as the case may be, an amparo lawsuit may be filed against article 27, section XV, subsection b) of the ITL as deemed unconstitutional.
If you have any questions regarding the foregoing, please do not hesitate to contact us.
 The value in Mexican pesos of an UDI as of December 14th, 2021, is 7.078875, in accordance with the last publication of the Bank of Mexico in the OGF.
Mexico City, December 14, 2021