Quality and Consistency at CARF: The Impact on Tax Risk Management

CARF’s new Quality Policy places efficiency, consistency of case law and legal certainty among its key objectives. For companies with significant tax exposure, these factors may influence not only the conduct of ongoing proceedings, but also their ability to assess and manage tax risk.

The Quality Policy of the Administrative Council of Tax Appeals (CARF), established by CARF/MF Ordinance No. 2,321 of 5 August 2026, sets out objectives of direct relevance to taxpayers: reducing the time required to resolve cases, preserving the quality of decisions, and promoting greater consolidation and consistency of administrative tax case law.

For companies with significant tax disputes, these objectives converge around two particularly important variables: time and predictability.

A dispute that remains unresolved for years, or case law that varies significantly across adjudicating panels, raises more than purely legal concerns. It can affect risk classification, provisions for contingencies, audits, corporate transactions and financial decisions. It is from this perspective that the new Quality Policy should be monitored.

Quality cannot be measured solely by the number of cases decided

Reducing case processing times and the backlog of pending cases is an important objective for any administrative tribunal. For companies, there is also an economic impact: a tax assessment that remains under dispute for years can affect financial statements, provisions and decisions that depend on an appropriate assessment of contingencies.

Efficiency therefore has economic value. Productivity alone, however, is not synonymous with quality. Faster adjudication represents genuine progress only if greater speed is accompanied by technically sound decisions, respect for the right of defence and proper consideration of the specific circumstances of each case.

The Quality Policy seeks to reconcile these dimensions. Its objectives include promoting efficiency in administrative tax and customs proceedings, facilitating the exercise of the right of defence, and pursuing legal certainty and technical quality in decision-making. To achieve this, it provides for performance indicators, quality controls, risk management, standardisation of working processes and continuous improvement.

Digital transformation and the use of new technologies also form part of this strategy. The benefits, however, should be assessed not only in terms of increased productivity, but also in terms of preserving individualised case analysis and the full exercise of the right of defence.

For taxpayers, therefore, the question will not simply be how many cases CARF is able to decide, but whether the new model can reduce processing times without compromising the quality of its decisions.

Greater consistency can improve predictability — without eliminating case-specific analysis

Perhaps the aspect of the new Policy with the greatest potential impact on tax risk management is its provision for the consolidation, harmonisation and publication of administrative tax case law.

Differences of opinion are natural within a collegiate decision-making body. The problem arises when substantially similar situations lead to different outcomes without clear reasons for the distinction. For companies, this uncertainty has practical consequences.

A single tax dispute may involve significant amounts, different assessment periods or several companies within the same corporate group. When CARF’s approach is inconsistent, it becomes more difficult to assess the likelihood of different outcomes, quantify contingencies and decide whether certain tax practices should be maintained or reviewed.

Greater consistency may therefore mean a greater ability to assess risk. There is, however, an important caveat: harmonisation should not mean the automatic application of precedents without regard to the specific circumstances of each case.

In tax matters, differences in documentation, transaction structures, contractual arrangements, accounting treatment or the facts underlying a tax assessment may be decisive to the outcome. Greater consolidation of case law is therefore likely to require even more careful analysis of the precedents relied upon in taxpayers’ defences.

It will not be sufficient simply to identify a favourable decision on a particular issue. It will be necessary to demonstrate why that precedent is genuinely applicable to the case at hand — or why an unfavourable decision should not apply because of relevant factual or legal distinctions.

Proper harmonisation should therefore lead to greater consistency without eliminating the individual assessment of each dispute. It is precisely this balance that can enhance legal certainty for taxpayers.

Case law should be treated as an ongoing tax risk management tool

It remains relatively common for more in-depth monitoring of case law to be concentrated around the time when a particular case approaches its hearing. For companies with significant tax exposure, this approach may be insufficient.

New decisions by the Superior Chamber of Tax Appeals, shifts in the prevailing approach of CARF panels, the consolidation of legal interpretations or the approval of binding administrative precedents may significantly alter the risk associated with a dispute long before the case is scheduled for hearing.

For this reason, monitoring administrative tax case law should operate as an ongoing risk management tool, rather than merely as preparation for a hearing. In practice, this means identifying the legal issues that represent the company’s principal tax exposures and monitoring their development in a structured manner.

Certain questions should be revisited periodically: Does the case law remain divided? Is a prevailing position beginning to emerge? Do the most recent precedents strengthen or weaken the company’s position? Does the risk assessment assigned to the contingency remain appropriate?

This monitoring should be connected to the review of contingencies and the related provisions. A risk classification assigned at the outset of proceedings should not remain unchanged for years if, during that period, there are material developments in case law, precedents from the higher courts or the underlying facts of the dispute. Tax litigation is dynamic. Risk assessment must be dynamic as well.

An appropriate governance framework should ensure that these assessments are reviewed and the necessary adjustments made, including for financial reporting purposes.

A risk classification assigned at the outset of proceedings should not remain unchanged for years if, during that period, there are material developments in case law, precedents from the higher courts or the underlying facts of the dispute. Tax litigation is dynamic. Risk assessment must be dynamic as well.

This requires greater integration between legal, tax, accounting and finance teams. Information regarding the progress of proceedings, developments in case law, the value of the exposure and its economic impact should not be managed in isolation.

The more significant the contingency, the greater the importance of connecting procedural information, legal analysis and economic impact. CARF’s own use of performance indicators may contribute to this process. Greater transparency regarding processing times, productivity and developments in decision-making is likely to enhance companies’ ability to plan for and manage their tax exposures.

What should change in the management of administrative tax disputes?

The publication of the Quality Policy does not immediately change the risk assessments of pending cases or eliminate existing divergences within CARF. It does, however, signal an institutional direction that may justify certain changes in how companies manage their administrative tax disputes.

The first is to adopt a more systematic approach to monitoring relevant tax issues, rather than focusing solely on individual cases. For companies with a significant volume of contingencies, it is important to identify the matters representing the greatest financial exposure and continuously monitor developments in the relevant case law.

The second is to link this monitoring to the periodic review of risk assessments and contingencies. Risk classifications should not operate as static assessments made at the outset of proceedings and rarely revisited.

The third is to deepen the quality of precedent analysis, assessing whether the facts, documents and legal grounds of previous decisions are genuinely comparable to those of the matter under review.

The fourth is to monitor whether the commitments made by CARF are translating into measurable results: shorter processing times, greater consistency in decision-making and the development of mechanisms to harmonise case law.

Ordinance No. 2,321 establishes important objectives. Its true impact on taxpayers will depend on its implementation. If it results in fewer unjustified divergences, greater transparency and more predictable decisions without compromising individualised case analysis, its effects may extend well beyond CARF itself.

Greater predictability in administrative tax disputes means a greater ability to assess risks, plan decisions and manage tax contingencies. This is why quality and consistency in case law are not exclusively institutional matters. They are also matters of business management.

This is the second in a series of four articles on CARF’s new governance rules. In the next article, we will address the new Anti-Bribery Policy and the precautions that companies, directors and advisers should observe in their interactions relating to administrative tax disputes.