Assessment of universal succession cases in tax liability

Tax liability exists when the substantive and adjective tax duties on tax lien can be claimed from the third parties in whose personality taxable event is not realized. Universal succession is a type of succession in which the whole of an estate with its concomitant rights and duties is transferred to the successor. In cases where the law recognizes universal succession, liability of the successor regarding the duties that had arisen before the act of law or act in law has happened, could be regarded as tax liability since taxable event has not been realized in the personality of successor. In case of death, heirs acquire the testator's estate by universal succession. When companies merge or split, the transfer is realized through universal succession. Similarly, transfer of a commercial enterprise as a whole is also realized by universal succession. In all these cases successor's liability could be regarded as tax liability. The common characteristic of universal succession cases mentioned above, is the change of debtors without the consent of the previous creditor. In this respect, universal succession constitutes an exception to the general rule in tax law which prohibits the change of tax debtors based on the will of the debtor due to its public nature. The exception laid down in article 8 paragraph 3 of Turkish Tax Procedure Law, covers tax debts only if such exception is enacted by tax laws. However, it is not easy to determine the cases where universal succession was recognized in tax law, since that law is under the influence of both civil law and public law. The absence of a general article regulating universal succession in Turkish Tax Procedure Law, causes some problems in terms of principle of legality in tax law. Universal succession has a twofold effect. Firstly, it secures the tax duties through succession to the new debtor. Secondly, it partially removes that security for some wealth taxes since universal succession does not necessitate the special conditions to be fulfilled for the transition and it enables the transfer of all rights and duties of the tax debtor as a whole by an act of law or act in law. In this study, following the general explanations on tax liability; universal succession cases are going to be evaluated separately by stating their problematic aspects. Consequently, some solutions for these aspects are going to be offered.