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Federal tax audits and disputes in Brazil: DRJ and CARF

Last verified: 2026-10-25

Federal tax assessments are challenged first before the Receita Federal's judgment offices (DRJ) and then on appeal before CARF, a joint body of tax authority and taxpayer representatives. Since January 2026 the deadlines for both steps are 20 business days. When CARF ties and the government's casting vote decides, penalties fall away and interest can be waived for prompt payment.

The rule

1. The challenge (impugnação) to an assessment must be filed in writing with supporting documents within 20 business days of notice.Decree 70,235/1972, as amended by LC 227/2026, art. 15, 2026-01-13 official text

2. First instance judgment belongs to the Receita Federal's Judgment Offices (DRJ); second instance to the Administrative Council of Tax Appeals (CARF), a joint body within the Ministry of Finance.Decree 70,235/1972, art. 25, items I and II, 1972-03-06 official text

3. A voluntary appeal against the first instance decision has suspensive effect and must be filed within 20 business days of notice.Decree 70,235/1972, as amended by LC 227/2026, art. 33, 2026-01-13 official text

4. Panel presidents are tax authority representatives with the casting vote in a tie.Decree 70,235/1972, art. 25, para. 9, 1972-03-06 official text

5. When a case is decided for the government by casting vote, penalties are excluded and the criminal referral is cancelled.Decree 70,235/1972, inserted by Law 14,689/2023, art. 25, para. 9-A, 2023-09-20 official text

6. If the taxpayer agrees to pay within 90 days after a casting vote loss, default interest is excluded and payment may be split into up to 12 monthly installments.Decree 70,235/1972, inserted by Law 14,689/2023, art. 25-A, 2023-09-20 official text

7. Taxpayer counsel may make oral arguments, and both instances must follow CARF precedents (súmulas).Decree 70,235/1972, inserted by Law 14,689/2023, art. 25, paras. 12 and 13, 2023-09-20 official text

8. The standard penalty in an ex officio assessment for non payment, non filing or inaccurate filing is 75% of the tax.Law 9,430/1996, art. 44, item I, 1996-12-27 official text

9. The LC 227/2026 amendments to Decree 70,235/1972 took effect on publication.Complementary Law 227/2026, arts. 173 and 182, item III, 2026-01-13 official text

Worked example

An assessment of BRL 10,000,000 (about USD 1,985,033) of tax plus a 75% penalty, BRL 7,500,000, is upheld at CARF only by casting vote. The penalty falls away. If the company signs up to pay within 90 days, default interest is also excluded and the tax can be paid in up to 12 installments. USD at the BCB PTAX selling rate of 23 October 2026, BRL 5.0377 per USD.

Step by step

On receiving an audit notice, preserve documents and appoint counsel; responses have short deadlines.
File the challenge with the DRJ within 20 business days of the assessment notice.
If the DRJ rules against you, file the voluntary appeal to CARF within 20 business days.
Track CARF precedents and consider settlement programs (transação) where available.
If CARF rules for the government, the matter can be taken to the courts.

Common traps

Counting 30 calendar days from old guidance; since LC 227/2026 the deadlines are 20 business days.
Missing the 90 day window to benefit from the interest exclusion after a casting vote loss.
Not raising all arguments at the first instance.

Sources

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