What is the statute of limitations?
Statute of limitations is a possibility that covers most civil law claims. What exactly does it consist of? Once the legal deadline has passed, the debtor can evade payment of the claim (i.e. debt). In a nutshell: after a specific period of time, he does not have to pay the creditor (after meeting certain conditions).
The running of the statute of limitations can:
- suspend – when there are objective obstacles, after their cessation the statute of limitations continues to run,
- interrupt – in certain cases, the statute of limitations may run anew.
What are the penalties for not paying Social Security?
You can’t voluntarily not pay Social Security contributions – it’s a mandatory tribute. In certain cases, an entrepreneur may only be exempted from paying for a certain period of time, such as when he is just starting a business. The obligation to pay contributions also does not apply to an entrepreneur in a situation where there is a concurrence of insurance (e.g., working as a salaried employee and running a sole proprietorship at the same time).
If you don’t pay your dues and are in debt, you face consequences. What’s the penalty for not paying Social Security? Watch out for:
- statutory interest added to unpaid contributions, calculated for each day of delay,
- fines of up to 100% of the premiums due,
- court case and the need to pay off all the additional costs, such as enforcement.
For example, Social Security can seize your salary – if you return to full-time employment after closing your business, and you still have debts related to contributions.
Learn more about the consequences of not paying Social Security contributions.
Are Social Security contributions subject to the statute of limitations?
Yes – as a rule, under current law, the statute of limitations for Social Security dues is possible. When does it occur? This is stated in the Law of October 13, 1998. On the social security system, Art. 24, para. 4:
“Contribution receivables are subject to the statute of limitations after a period of 5 years, counting from the date on which they became due, subject to paragraph (2). 5-6”.
What does this mean in practice? If an entrepreneur fails to pay social security and health insurance contributions by the due date (that is, the last day the deadline passes), he will be in debt. Social Security can at any time admonish the repayment of money owed. Theoretically, he has 5 years to do so – after this time the statute of limitations will have run, although for officials this deadline does not always matter.
However, Constitutional Court Judge Leon Kieres said:
“The existence of the statute of limitations does not have the function of relieving obligated parties of the need to pay overdue contributions, but plays the role of motivating the authorities to take swift enforcement actions.”
In practice, Social Security very often starts the case at the last minute – that is, right before the day the statutory 5 years pass. In this case, you have to deal with additional money to pay (interest, penalties, enforcement fees).
Remember!
Statute of limitations for Social Security contributions – legal basis: there is no law on the statute of limitations for Social Security contributions, but this issue is regulated by the Law of October 13, 1998. On the social security system.
When are Social Security contributions not time-barred?
Do you have unpaid Social Security contributions? The statute of limitations does not apply to two specific cases – these are very important exceptions. This is stated in Art. 24 para. 5 of the aforementioned law:
“Contributions receivable secured by a mortgage or pledge shall not be barred by the statute of limitations, however, after the expiration of the statute of limitations, such receivables may only be enforced against the subject of the mortgage or pledge up to the amount of overdue contributions and default interest calculated to the date of the statute of limitations.”
What is the interruption of the statute of limitations for Social Security contributions?
Even if, in theory, 5 years have passed since the date of enforceability (i.e., the date on which the premiums were paid) – this does not yet mean that the statute of limitations has actually passed. How is this possible?
The statute of limitations on unpaid Social Security contributions can be interrupted or suspended. After interruption – it runs anew, after suspension – it continues to run. Such cases are also described in detail Law of October 13, 1998. On the social security system.
The suspension comes first and foremost:
- for the duration of Social Security activities during which it enforces unpaid contributions (Social Security must inform you that it is initiating such activities),
- when you apply to pay your dues in installments (for the duration of the installment arrangement),
- for the duration of the testator’s death (from the date of death until the date the provisions of the estate become final, a maximum of 2 years after death),
- when the Social Security Administration issues a decision establishing the obligation to be subject to social security (from the date of initiation of the proceedings until the date the judgment becomes final).
And when does the interruption of the statute of limitations take place? The time limit is interrupted if the company declares bankruptcy. The new deadline is counted from the day after the bankruptcy proceedings are authorized or discontinued.
Social Security’s statute of limitations calculator, interest
At the link https://www.zus.pl/firmy/rozliczenia-z-zus/kalkulator-odsetkowy-dla-platnikow-skladek-zus you will find a calculator to know the exact amount of interest for late payment.
To check the total amount of debt, it is best to use your profile on the Social Security electronic services platform (PUE). You can log in there with a trusted profile, electronic banking (some banks available) or a qualified electronic profile. In addition, you can contact Social Security in person or by phone.
How to know the exact date on which the statute of limitations will expire? In the case of this liability, it is difficult to establish unequivocally that the statute of limitations will 100% occur on a specific date. All because of the extensive gear suspension capabilities.
Instead of waiting for the statute of limitations to run out and hoping that Social Security won’t come forward to claim the money – it’s worth exploring the options available.
Overdue Social Security contributions – statute of limitations or not? Step by step
Even if the debt is time-barred – that still does not mean that Social Security cannot demand payment at all. Sometimes it tries to recover unpaid premiums even after several years.
It may also turn out that, contrary to appearances, the statute of limitations has not run at all – you already know how many factors affect the suspension of the course (including the initiation of Social Security actions to return the contributions due).
What about when the statute of limitations has definitely run out, and Social Security nevertheless comes forward to claim the money? Is it possible to file a claim for the statute of limitations on Social Security contributions? If you disagree with the decision that you must pay, file an appeal with the court, claiming that the claim is time-barred. It’s very important to do this before taking any steps. If you pay even a small part of the debt at this point, it will be assumed that you agree with the decision. So it will be necessary to pay the rest.
EXAMPLE
Mr. Jan did not pay his Social Security contributions on time. Although seven years have passed and the statute of limitations has run, Social Security has begun collecting the money owed. Mr. Jan, instead of raising the statute of limitations on the claim, paid the first part of the premiums. Thus, he deprived himself of the possibility of effectively exercising the statute of limitations.
Remember, too, that Social Security officials very often seek refunds at the very end of the deadline. It is not uncommon, for example, for 4 years and a few months to pass. Then the interest and penalty and additional fees can already be very large.
Is it possible to write off Social Security contributions?
Some entrepreneurs are counting on luck – they hope that Social Security will not come forward to collect the debt, and will be able to appeal the decision after the statute of limitations has run out. However, there are several ways in which you can avoid penalties, interest or even write off the debt altogether.
The business.gov.pl website states:
“If, for legitimate reasons, you have problems paying your dues, you can apply to Social Security for: deferment of premiums, installment arrangement or remission of dues.”
What exactly do these solutions consist of?
Cancellation of liabilities to Social Security is available to those entrepreneurs who are in a very difficult financial situation, such as when they have suffered losses due to an extraordinary event, serious health problems, etc. Only those contributions that are paid for oneself (not for employees) can be remitted. The application must be accompanied by, among other things. Documents confirming the company’s poor condition and inability to repay its debts.
Deferral is only available for current contributions (if the due date has not yet passed). In this case, Social Security will not charge interest.
An installment arrangement, on the other hand, is an opportunity to pay off an already created debt in installments. Again, no interest will be charged. In addition, the signing of the installment agreement suspends enforcement proceedings and the running of the statute of limitations on contributions.
You can submit your application electronically (on the PUE portal), by mail or in person. Remember, too, that just because you submit a request doesn’t yet mean that Social Security will definitely grant your request.
Although the statute of limitations on Social Security contributions runs out after 5 years, officials can theoretically still claim the debt. It is worth knowing what to do in such a situation to take advantage of the rights granted by the law.
If you want to avoid problems in the future, and you don’t always have the means to pay Social Security contributions on an ongoing basis, take a look at the tax financing offer from PragmaGO. Completely online and without unnecessary paperwork!
