Further to the below update, we have selected a court case whereby an embargo was effectively ordered against a taxpayer’s virtual account within the context of tax enforcement proceedings. On this opportunity, the Federal Chamber of Mar del Plata ordered the seizure of all “present and future assets held or to be held by the defendant in his MERCADO LIBRE SRL digital account” (Court file FMP 18507/2019 – “AFIP v. Kjer, Aníbal Omar – Tax Enforcement Proceedings”).
Based on the principle that a debtor’s estate is a guarantee for creditors and in the absence of any rule banning precautionary measures against digital wallets, magistrates have accepted the petition of AFIP’s attorneys. Still, it is not clear if the seizure affects the Mercado Pago (SPS) virtual wallets, the accounts held in Mercado Libre (e-commerce) for doing business or both.
Additionally to the administrative procedures carried on by AFIP to request seizures of digital wallets owned by taxpayers to settle tax-related debts, this alternative started to be requested by lawyers assisting clients in other practice areas and approved by judges in many cases. For instance, in an alimony case held in the province of Tucumán (File case 1681/22. No relevant personal data has been disclosed considering this is a family case), the competent Judge, María del Rosario Arias Gómez, issued a seizure order against all the Binance accounts held by the defendant.
By virtue of this court order, a preventive seizure was ordered for the total amount of USD 5.000.- plus USD 1.500.- (principal and interest) from all the debtor’s accounts in Binance platforms and trade names. This is an innovative trend whereby creditors resort to these assets to guarantee the
collection of their claims. Seizure was not ordered against a PSP account in pesos but against “all current and future funds to be liquidated in favor of the debtor”. Therefore, any crypto transaction made by the debtor in the platform would be subject to seizure effects. From our blog we have no news on the actions taken by Binance regarding this issue but this is a precedent to be considered by the crypto environment. Neither do we have information regarding to which account the creditor would be receiving such payment. In the absence of court accounts in cryptocurrencies or stablecoins, it would be extremely heterodox to receive a legal remittance in a digital wallet.
We can conclude that new technologies, digital wallets and cryptocurrencies have become quite popular for a broad sector in Argentina.
It is publicly known that the Federal Administration of Public Revenue (AFIP) is entitled to order precautionary measures for the collection of tax-related debts, but the entity is currently targeting digital assets held by debtors such as digital wallets and other platforms.
Due to the resumption of the confiscation procedures (suspended due to the Covid-19 pandemic), a new seizure procedure emerged affecting not only traditional bank accounts but also digital accounts. As reported by Infobae, AFIP has targeted 9.800 debtors: Mercado Pago ranks digital wallets’ list with over ARS 270 million in concept of balance amounts as of the third quarter of 2021.
Digital wallets are considered by AFIP assets subject to seizure for the collection of tax-related debts. The recommendation for AFIP’s attorneys was made in November 2021 but this was made effective as from January 31 st , 2022.
It is up to each agent to decide which accounts or assets are likely to be confiscated but, now, there is a defined procedure for the seizure of digital wallets (apart from bank accounts, credits, accountable assets, etc.).
Official sources have reported as follows: “The decision taken by AFIP to include digital accounts as assets subject to confiscation for the collection of debts is based on the development and widespread use of electronic payment methods.” We wonder if this procedure will have the
backing of the courts in litigation between individuals.
As previously reported in other articles in our blog, AFIP has been requesting relevant data to virtual assets service providers regarding their clients’ accounts and disclosure of identities invoking Central Bank’s requirements and statistics purposes. However, as we anticipated in this article, other reasons were behind this requirement because statistics are not based on personal data. This fact is now being admitted by official sources.
The complex mechanism to seize balance amounts from digital accounts does not appear to be so attractive to AFIP’s attorneys due to the lack of regulation and innovative aspects. Tax authorities have stated: “AFIP regulation does not prioritize assets for seizure purposes in order to collect debts. However, facts show that embargo procedures start with more liquid assets such as bank accounts. If the available balance is insufficient or taxpayers hold other type of accounts, seizures are requested over other assets.”
The total seizable amount corresponding to the 9.800 defaulting taxpayers is estimated in $ 24,000 million and is likely to be collected through this new mechanism. During the suspension of execution of tax debts, AFIP assisted debtors to soften the effects resulting from the economic crisis and/or from the pandemic. From February onwards the situation changed completely and enforceability measures were approached by tax authorities.
AFIP can seize balance amounts held in any account in pesos having a Uniform Virtual Key (CVU). Additionally to Mercado Pago, the list includes 30 digital wallet companies that operate in pesos such as Bimo, Ualá, Naranja X, among others. For the time being, the procedure affects only
accounts in pesos but, in the near future, other assets could be included in the list such as crypto wallets and/or other financial or investment assets.
Regulators around the world have focused on the FinTech sector but Argentinean authorities have applied stricter policies than others. This impacting situation has been reported by the specialized media Bitcoin.com.
News from the legal sphere prompted to emerge. In the court case “National Treasury-AFIP v. González Damián Alfredo Tax Enforcement Proceedings”, the Federal Social Security Court N°10 issued a decision on 18/02/2022 ordering the seizure of the defendant’s assets in the platforms
Mercado Libre and Brubank upon failure to confiscate traditional bank accounts. Even though this is a lower court order likely to be appealed, we assume AFIP’s attorneys will increasingly act likewise in future cases.
Diego J. Nunes
Estudio Nunes & Asoc.