At the administrative and administrative tax court levels, 30 business days as of the date of the notification of the tax assessment.
Taxpayers are empowered to challenge the tax assessments issued by the tax authorities either through: (i) the filling of the administrative appeal before SAT's Legal Section; or (ii) the filing of the nullity petition before the Federal Court of Administrative Justice or Tax Court. If the administrative appeal is filed and unfavorably resolved later on, the taxpayer would be allowed to challenge it before the Tax Court. Conversely, if the taxpayer decides to challenge the tax assessment first through the filing of the nullity petition before the Tax Court, the unfavorable outcome, if any, could not be challenged through the filing of the administrative appeal. Such an outcome would be contested through the filing of an "amparo" petition before the Collegiate Circuit Courts.
- Administrative appeal — The administrative appeal must be filed within the following 30 business days as of the date the tax assessment is notified to the taxpayer; this remedy is to be filed before SAT's Legal Section. By filing the administrative appeal, taxpayers are allowed to provide information different or in addition to the one filed during the audit process. This possibility is not available within the context of the filing of the nullity petition before the Tax Court. In most cases, where the possibility exists to provide additional information to that presented during the audit process, it is advisable to file the administrative appeal instead of the nullity petition as this election will permit the case a better structure and argument and even offer evidence that was not fully structured or filed during the audit process. This possibility will be available to the taxpayer during the first 30 business days as of the date of filing of the administrative appeal. Taxpayers filing the administrative appeal will be relieved from securing the tax interest through a bond or other means during the time the administrative appeal lasts. If the ruling of the administrative appeal is totally or partially unfavorable, taxpayers will be entitled to challenge the resolution through the filing of a nullity petition before the Tax Court. The administrative appeals process may last from 12 to 16 months as of the date of filing. In practice, in most cases, administrative appeal decisions confirm the outcome of the tax audit. However, it would be advisable to file first an administrative appeal instead of a nullity petition in cases were additional evidence will be filed or in cases where there is a conviction that a favorable decision can be obtained, either through direct discussions with SAT or through the assistance of the Mexican Tax Ombudsman ("Prodecon") upon the filing of a claim whereby Prodecon will intercede on behalf of the taxpayers in the discussions with SAT.
- Administrative appeal on substantive matters — Alternatively, the possibility exists for taxpayers to resort to this type of appeal instead of the regular one when the taxpayer's position is strong enough on the substance for the matter to be decided in its favor. This is an expeditious and efficient process and is not advisable when the tax position assumed by the taxpayer is not strong enough.
- The nullity petition.
See further in follow-up questions.
The administrative appeal may last from 12 to 16 months whereas the nullity petition process may last from one and a half to two and a half years.
a. Start: Taxpayers are entitled to challenge tax assessments either through the filing of the administrative appeal or through the filing of the nullity petition. When the resolution to the administrative appeal does not satisfy the legal interest of the taxpayer, the latter could dispute it through the filing of the nullity petition, in which case the taxpayer will not be able to include concepts not raised in the administrative appeal. As such, taxpayers are entitled to file the nullity petition before the tax court within the following 30 business days as of the date the tax assessment determined upon the closing of the audit or the date when the resolution of the administrative appeal is notified.
Directly filing the nullity petition is advisable only in cases where all the evidence needed has been properly filed during the audit and a decision has been made that it is not worthy to challenge this first through the filing of the administrative appeal as no possibility would exist to overturn the outcome of the audit. If a decision has been made to file the nullity petition, Taxpayers will not be able to provide additional or different evidence than the one filed during the audit process. Taxpayers will be required to secure the tax interest through a bond or any other allowed mechanism during the time the process lasts. The most common alternative to secure the tax interest is the bond, except when the amounts at stake are quite relevant; it is a costly way of securing the tax interest as bonding companies charge fees close to 2% on an annual basis over the amount covered. Although these fees are deductible, still they represent an important cost for taxpayers. The bond covers the tax interest, that is, the principal amount, inflationary adjustments up to date and for the following 12 months, surcharges up to date and for the following 12 months and penalties and needs to be renewed on a yearly basis. The Mexican Tax Court is independent from SAT and impartial decisions are theoretically made. We have noticed however that in some cases the tax courts are unjustifiably ruling in favor of SAT's interest. In practice, nullity petition processes last from one and a half to two and a half years.
a.1 Nullity petition on substantive matters.
b. Alternatively, the possibility exists for Taxpayers to resort to this type of remedy instead of the regular one when the taxpayer's position is strong enough on the substance for the matter to be decided in its favor. This is an expeditious and efficient process and is not advisable when the tax position assumed by the taxpayer is not strong enough. The benefit of this alternative is that the Taxpayer will be released from the obligation to secure the tax interest during the first instance of the procedure.
c. Conduct of the proceedings: If the decision handed down is totally or partially unfavorable, Taxpayers would be entitled to challenge the resolution through the filing of the "amparo" petition before the Collegiate Circuit Courts.
d. Completion of proceedings: The judicial stage concludes with the resolution handed down by the Circuit Court.
e. Other actions: In few cases, an appeal before the resolution issued by the Circuit Court can be filed before the Supreme Court of Justice and only when relevant constitutional aspects are to be decided.