In tax law, the statute of limitations is a critical concept that affects both the state's financial rights and the taxpayer's legal security. The state cannot be expected to demand tax liabilities indefinitely, and similarly, taxpayers should not live under the perpetual threat of old debts. The statute of limitations ensures balance between these interests. Like other public receivables, tax debts must be assessed and collected within certain timeframes. Otherwise, they legally expire.
Legal Nature of the Statute of Limitations
The statute of limitations refers to the termination of a public receivable when it is not assessed or collected within a defined period. In tax law, it is a matter of public order and is binding on both the administration and the taxpayer. It protects taxpayers from constant exposure to liability and compels the tax authority to conduct audits within a reasonable time. It limits the taxpayer's responsibility while increasing the effectiveness of the tax system.
Types of Statute of Limitations in the Tax Procedure Law
According to the Tax Procedure Law, the statute of limitations is evaluated under two main headings: assessment statute of limitations and collection statute of limitations. The assessment statute of limitations determines the time in which the tax authority must calculate and notify the tax debt, whereas the collection statute of limitations defines the period in which the accrued tax must be collected by the state. These two types of limitations are subject to different processes and operate in different ways. Therefore, they should be assessed separately.
Assessment Statute of Limitations
Assessment statute of limitations defines the period during which the tax authority must calculate the tax liability and notify it to the taxpayer. According to Article 114 of the Tax Procedure Law, this period is five years, beginning from the start of the year following the occurrence of the taxable event. Once this period expires, the tax liability—even if it exists—loses its legal enforceability.
This situation provides significant legal security for taxpayers. After five years, taxpayers are protected from being subject to tax obligations related to past periods. Moreover, the statute of limitations on assessment prevents not only the principal tax amount but also any related penalties from being applied. Taxpayers can track the limitation period closely and invoke the statute of limitations as a defense to annul unlawful assessments.
Events that Interrupt or Suspend the Period:
- Interruptions restart the five-year period and
include:
- Tax audits
- Criminal complaints
- Court proceedings
- Applications for pre-assessment settlement
- Reassessments after court annulments
- Suspensions pause the time count, such as:
- Force majeure (earthquakes, pandemics, etc.)
- Taxes not yet due in the relevant calendar year
- Ongoing judicial proceedings
The expiration of the statute eliminates the tax and related penalties. Taxpayers can invoke the statute of limitations as a defense to nullify wrongful assessments.
Taxpayer Rights Regarding Assessment Statute of Limitations
Assessment statute of limitations defines the period in which the tax administration can impose and notify a tax liability. According to Article 114 of the Tax Procedure Law, this period is five years, starting from the beginning of the year following the year in which the taxable event occurred. If this time limit expires, the tax debt is considered to have never legally existed. This offers significant legal protection to taxpayers, as they cannot be subjected to tax obligations related to expired periods. It also applies to tax-related penalties. Taxpayers should closely monitor these time limits and, when necessary, raise a statute of limitations defense to nullify any unlawful tax assessments directed at them.
Collection Statute of Limitations
Collection statute of limitations determines how long the government can enforce the collection of an assessed tax liability. According to Article 102 of the Tax Procedure Law, this period is five years, starting from the beginning of the calendar year following the year the tax was assessed. Once the statute of limitations for collection expires, the tax debt is extinguished, and the government can no longer pursue it through enforcement or seizure.
This regulation provides important legal security for taxpayers by preventing long-forgotten tax debts from continuously resurfacing. If a taxpayer is confronted with a payment order or seizure related to a debt that has expired due to the statute of limitations, they may file a lawsuit in the tax court to have the action annulled. The statute of limitations defense becomes the taxpayer's primary tool in such cases.
Interruptions that Restart the Period:
- Issuance and notification of a payment order
- Imposing a lien
- Initiating enforcement proceedings
- Filing a lawsuit
- Agreeing on installments or debt restructuring
- Partial payments
- Offering assets against public debt
Suspensions That Pause the Period:
- Force majeure (natural disasters, etc.)
- Judicial stays or injunctions
- Deferred enforcement due to legal processes
- Grace periods granted to the debtor
Taxpayers must track all actions taken by the administration on past debts. Expired debts cannot be subject to enforcement. Payment orders or seizures issued after expiration can be contested and annulled in court.
Taxpayer Rights Regarding Collection Statute of Limitations
According to Article 102 of the Tax Procedure Law, the collection statute of limitations is five years from the beginning of the year following tax assessment. If this period lapses, the tax authority can no longer collect the debt through enforcement. Taxpayers can file complaints against payment orders or liens issued after this period.
Problems Encountered in Practice
One common issue is the confusion between assessment and collection periods. Taxpayers may think that if a tax is not assessed, it cannot be collected. However, each statute starts independently and is interrupted by different actions. Furthermore, interruption actions must be properly documented and served to the taxpayer. Improper notifications do not stop the limitation clock.
Limitation for Imposing Penalties
Tax penalties—such as for tax loss, irregularities, and special irregularities—must be imposed within the five-year assessment period. If not, the penalty becomes invalid. Taxpayers can contest late penalties by invoking the statute of limitations.
Statute of Limitations for Corrections
Both the tax authority and the taxpayer can request corrections for tax errors. However, these are also subject to a five-year limitation, starting from the year after the error occurred. Applications beyond this period are denied.
Interruption and Suspension of Limitation Period
Interruptions reset the period to zero, and may result from:
- Sending a payment order
- Enforcing a lien
- Filing a lawsuit
- Signing a payment agreement
- Partial payment
Suspensions pause the period due to:
- Tax audits
- Judicial proceedings
- Force majeure
To be valid, these actions must be officially notified to the taxpayer. Otherwise, the limitation period remains unaffected. Interruptions allow renewed legal and collection actions. Suspensions delay the expiry of the period.
The statute of limitations in tax law is not merely a technical timeframe—it is a core principle protecting taxpayer rights. Assessment and collection statutes establish legal balance between the taxpayer and the administration. Time-limited enforcement ensures the state cannot pursue endless tax claims, and taxpayers gain confidence that old liabilities will not unexpectedly resurface.
Therefore, taxpayers should understand these periods well, assert their defenses timely, and seek legal help if necessary.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
