One of the more powerful weapons in the arsenal of the Costa Rica’s tax collector is something called Artículo 144.
This section of the tax code says every taxpayer must deposit within 30 days whatever the Dirección General de Tributación says is owed before an appeal can be filed.
This rule does not just apply to big business, Expats can be snared, too. For example, a tax investigator might conclude incorrectly that Canadian snowbirds have been renting their beach home while they are not in Costa Rica and failing to pay sales tax on the rent. The result would be a large assessment of taxes owed, fees and interest.
The snowbirds would have to come up with the cash before presenting what might be an air-tight case. Of course, there would be delays in getting the money back if they won.
That situation might even apply to the purchase or sale of a vehicle by another expat.
So even if the expat is in the right, and the tax agency is incorrect, no challenge is possible until the full amount is paid. And then the case goes to the tax agency in-house court.
So it might be years before the expat can get a fair hearing in a legitimate court even if the tax collectors are wrong.
If this process sounds unfair, the Sala IV constitutional court considered that it might be and has scheduled a hearing for Thursday in an appeal of the tax code article. No decision is expected then, but the Ministerio de Hacienda is expected to mount an argument in defense of the article.