Failure to pay declared ICMS a habitual crime

In December 2019, the Plenary of the Federal Supreme Court (“STF”) decided to criminalize the non-payment of declared ICMS, as long as the conduct is intentional and persistent, constituting the crime set forth in article 2, II of Law 8.137/1990.

At the time, the reporting judge (Minister Luís Roberto Barroso) defined that the non-payment of the tax was equivalent to misappropriation, since it did belong to the taxable person’s assets. Moreover there should be jurisprudential consistency with RE 574706 (which excludes ICMS from the basis of PIS and COFINS). If the amount cannot be considered as the taxable person’s equity, retaining it unjustifiably, according to the understanding signed in December of last year, would be misappropriation of a value that belongs to the State.

When deciding on the illegality of non-payment of the ICMS, it was expected that the number of police inquiries and criminal actions against defaulting merchants would enhance. With the pandemic and the consequent economic crisis in the country, the increase in investigations, prosecutions and freezing of assets against entrepreneurs who did not pay ICMS payments grew.

Therefore, the Supreme Court decided that the default of ICMS will be considered a crime only when the default of the debtor is reiterated, systematic, persistent, a true business model of the entrepreneur, in the words of Minister Luís Roberto Barroso. In addition to the actual conduct of repeated default, account should be taken on the agent’s history of regular tax payments, despite episodes of specific non-payments, justified by certain factors.

An isolated act or a few scattered acts of non-payment of the tax are not sufficient to constitute the infraction, only the set of repeated defaults would fall under the crime of article 2, II of Law 8.137/90.

With the adoption of this new criterion, the crime will only exist if it is habitual, that is, if practiced regularly and repeatedly. In view of this, when the subject commits the crime provided in article 2, II of Law 8.137/90, according to the new interpretation of  STF, even if  many acts of default have been committed, there will be only one crime, a single crime.

The penalty provided for the crime is 6 months to 2 years of imprisonment and a fine, with the possibility of benefits being applied such as the criminal transaction, the conditional suspension of the process or the non-prosecution agreement.