Notices for Failure to File: What You Need to Know

A “notice for failure to file” is a tool available to the tax authority to ensure that taxpayers submit tax returns for any taxes they have omitted. Understanding this mechanism is essential to properly exercise the right to defense—especially when it relates to the Industry and Commerce Tax (ICA), given that multiple municipalities may be interested in taxing the income arising from the taxable event.

What is the difference from persuasive invitations?

Taxpayers frequently receive friendly emails from the tax authority inviting them to file tax returns that have not yet been submitted. However, notices for failure to file are genuine preparatory administrative acts that formally tie the taxpayer to an audit process. They are also a prerequisite for imposing the penalty and issuing an estimated assessment (aforo) for the unfiled tax.

How much time do I have to respond, and what should the response be?

The taxpayer has one month to respond to the notice. The response may take one of two forms:
i) File the omitted return, including payment/assessment of the applicable late-filing penalties; or
ii) Submit a written defense, with supporting evidence, explaining the reasons why the taxpayer is not required to file that return.

What evidence can help in your defense?

In general, any evidence demonstrating that the taxable event giving rise to the tax did not occur is relevant. In ICA cases specifically, it is crucial to provide financial statements and a certificate signed by an accountant or statutory auditor stating that no business activities were carried out in the municipality referenced in the notice (Art. 777 of the Colombian Tax Statute – ET).

Who bears the burden of proof?

Article 715 of the Tax Statute (ET)—replicated in most municipal tax statutes—provides that the authority may issue a notice for failure to file “after verifying the obligation” to file. This language is not incidental or meaningless: it establishes a real evidentiary mandate and procedural burden on the authority. In other words, a notice is only legitimate and lawful if, prior to issuing it, the authority complied with its burden to verify that the filing obligation existed. Otherwise, the notice should not be issued, or the audit procedure initiated must be decided in the taxpayer’s favor—preventing poor practices such as mass notices issued without any supporting basis.

What can I do if the authority persists despite my defense?

If the authority rejects the arguments and imposes the penalty for failure to file and issues an estimated assessment (aforo), the taxpayer has two defense options. First, the taxpayer must file a motion for reconsideration before the same authority that issued the act, within two months of notification. If this motion is decided unfavorably, the taxpayer may then go to the courts to seek judicial review of the legality of the acts. It is essential to comply with these deadlines and to exhaust the motion for reconsideration as a prerequisite to judicial action; otherwise, the lawsuit may be dismissed for failure to exhaust administrative remedies.

Written by: Juan José Alzate