Introduction

After having studied the issues related to employer-employee obligations in social security matters in the entries Employers’ Social Security Contributions and Obligations in Mexico and, more importantly, what happens in the event of non-compliance in Non-Compliance With Social Security Obligations and Its Consequences in Mexico. Now, it is time to go a step further and discuss one of the many legal remedies a taxpayer may file against a tax liability in Mexico regarding his social security obligations.

I am talking about unconformity relief for non-compliance, which also exists in the Social Security Law. Still, paradoxically, its scope, hypotheses, and effects are regulated in a simple regulation: the Regulation of the Unconformity Relief. I will base this entry on this regulation and illustrate how, with this legal remedy, you, as an employer, can defend yourself against the acts issued by the Mexican Social Security Institute. Without further ado, let’s begin.

List of Contents

• 1) Acts Subject to Challenge
• A) Non-Existence of the Employment Relationship
• 2) Who Decides This Legal Remedy
• 3) Term
• 4) Optional Relief
• 5) Supplementary Legislation
• 6) Requirements For This Legal Remedy
• A) Obscurity of the Relief
• 7) Documents Attached
• 8) Notifications
• A) Domicile
• B) When Do Notifications Take Effect?
• C) Business Days For Notifications
• D) Rules When Challenging the Notification of the Contested Act
• 9) Inadmissibility
• 10) Dismissal
• 11)  Processing of the Unconformity Relief
• A) Permitted Evidence
• B) Evidence Period
• C) Ex Officio Evidence
• D) Special Rules For Evidence
• 12) Resolution
• A) How Resolutions Must Be Issued
• B) Dissenting Vote
• C) Right to Veto
• D) Notification
• E) Execution
• 13) Revocation Relief
• 14) Suspension of the Execution

Translation

This is a translation of my entry El recurso de revocación en materia de seguridad social.

1) Acts Subject to Challenge

Although employers can use unconformity relief to challenge determinations of the Mexican Social Security Institute that may constitute tax liabilities in terms of article 287 of the Social Security Law, such as resolutions, agreements, or settlements issued by the aforementioned institute, this should not be thought to be exclusive to the employer.

On the contrary, in some cases, workers and beneficiaries can use this legal remedy, such as when the worker or his beneficiaries do not agree with the classification of the accident or illness made by the Mexican Social Security Institute. However, I want to highlight that this legal remedy is viable for employers for tax purposes. 

A) Non-Existence of the Employment Relationship

Special mention must be made regarding the act challenged by the employer about the outright denial of the employment relationship concerning those workers indicated in the payroll certificates for employer-employee contributions or constitutive capital. When this occurs, the Secretary of the Delegation Advisory Council may order that the unconformity relief be forwarded to the workers’ union holding the collective labor contract so that it may state what is convenient for its rights. If the workers are not unionized, the transfer may be made directly to them if there is a domicile to make it known to them.

In both cases, 6 working days, starting from the day after the notification takes effect, shall be granted to state what is convenient to its rights.

2) Who Decides This Legal Remedy

The competent bodies to resolve the unconformity relief ordinarily are the advisory councils of the Mexican Social Security Institute, so unlike the Federal Administrative Court of Justice, if you as an employer appeal a tax determination, you can at least do so before someone close to you. Of course, if there is no regional chamber for the aforementioned court.

However, if an advisory council issued the act, the Technical Council of the Mexican Social Security Institute shall be the competent body to resolve this legal remedy.

3) Term

The term for filing the unconformity relief is 15 business days following the date the notification of the act being challenged takes effect. This term is less than 30 business days, the time available to file the Contentious Administrative Trial before the Federal Administrative Court of Justice.

4) Optional Relief

Articles 294 and 295 of the Social Security Law expressly provide that the appeal for non-compliance is optional. When dealing with tax matters, if that is your wish as an employer, you can validly challenge the act before the Federal Administrative Court of Justice.

5) Supplementary Legislation

For both the processing and resolution of the unconformity relief, the Regulation of the Unconformity Relief shall apply in the first instance and, in the absence of an express provision, the provisions contained in the Federal Tax Code, the Federal Labor Law, and the Federal Code of Civil Procedure—very soon the National Code of Civil and Family Procedure—shall apply supplementarily, provided that said provisions do not contravene the Social Security Law and its regulations.

6) Requirements For This Legal Remedy

The requirements for filing the unconformity relief, according to the regulations, are the following:

1.- Name and signature of the appellant.

If the promoter does not know or cannot sign, much less stamp his fingerprint, another person may do so on his behalf, stating the reasons for the impossibility.

2.-  Indicate the domicile to receive notifications.

3.- Specify the employer registration number of the appellant.

4.- Specify the act being challenged and, if applicable, the number and date of the resolution, the tax liability number, period and amount, date of its notification, and the issuing authority.

5.- Facts or background of the case.

6.- The issues or arguments against the challenged act.

7.- Name of the workers’ union holding the collective contract agreement, as well as the address where they can be notified for the purposes of article 7 of the Regulation of the Unconformity Relief.

8.- The evidence intended to be offered in the legal remedy related to the contested act.

A) Obscurity of the Relief

If the written of unconformity relief is obscure, irregular, or does not comply with the requirements indicated in the regulations, the Secretary of the Delegation Advisory Council shall warn the appellant, once only, to clarify, correct, or complete it. For this purpose, he shall expressly indicate the defects or omissions with the warning that if the appellant does not comply within the term of 5 days with the corrections or clarifications, the unconformity relief shall be dismissed outright.

7) Documents Attached

When filing an unconformity relief, the appellant must attach the following documents:

1.- The document in which the contested act is recorded.

2.- When acting on behalf of another, the original or certified copy of the documents that prove their identity. In the event that the matter does not exceed 1000 times the general minimum wage in force in Mexico City and it is an individual, it shall be sufficient to attach a Power of Attorney signed by the grantor before two witnesses. On the other hand, when it exceeds that amount or the person intends to represent a legal entity, a Power of Attorney ratified under a notary public must be attached.

3.- The proof of notification of the contested act, except when the promoter declares under oath that they did not receive it.

4.- The documentary evidence offered.

8) Notifications

As a general rule, notifications shall be made to the appellant personally or to his legal representative by certified mail, in the terms indicated by the Federal Tax Code. In any case, agreements or resolutions that:

1.- Admit or reject the legal remedy shall always be personally notified.

2.- Admit or reject evidence.

3.- Contain or indicate dates or terms to comply with requirements or carry out evidentiary proceedings.

4.- Order proceedings to better provide.

5.- When the authority requires the presence or procedural activity of the appellant.

6.- When the dismissal of the legal remedy is declared.

7.- When the unconformity relief is terminated, or resolutions of the jurisdictional bodies are complied with.

8.- The agreements that resolve the suspension of the administrative procedure.

9.- The agreements that decide on the revocation relief.

10.- The first notification to third parties.

The other decisions issued during the unconformity’s processing, considered merely procedural, shall be available to interested parties for consultation in the respective file.

A) Domicile

Personal notifications shall be made at the domicile indicated by the appellant. In the absence of a domicile, notifications shall be carried out by the list in the stands that are enabled in the institutional offices. The list shall remain posted for a period of 5 business days, and the date on which the notification is posted and the date on which it is withdrawn must be recorded.

B) When Do Notifications Take Effect?

All notifications shall take effect from the business day following the day on which personal notification has been made, after the letter containing the resolution being notified has been delivered or on the fifth business day following the date on which the respective notification takes effect.

C) Business Days For Notifications

As a general rule, in all terms or periods indicated in the regulation, only business days shall be counted, understood as those in which the administrative offices of the institute are open to the public and the same tasks are carried out in a normal or ordinary manner, including in this period the due date.

D) Rules When Challenging the Notification of the Contested Act

When it is alleged that an administrative act was not notified or that the notification was made illegally, the following rules shall apply:

1.- If the dissatisfied party claims to be aware of the act, the challenge against the notification shall be made in the document in which the unconformity relief is filed, stating the date on which he became aware of it and setting forth the relevant issues regarding the act, together with those made against the notification.

2.- If the appellant denies knowing the act, he must state this in his written complaint. In this case, the authority processing the relief shall inform the dissatisfied party of the act and its notification at the domicile indicated in the written complaint and to the person authorized for this purpose.

Once this has been done, the appellant shall be given 15 business days from the date the act was made known to him to extend the legal remedy, challenging the act and its notification or only the notification.

3.- The issues relating to the notification shall be studied first and then, if applicable, those relating to the challenged act.

4.- If it’s decided that there was no notification or that it was illegal, the appellant shall be considered to have been aware of the act from the date on which he stated that he was aware of it or on which it was made known to him and the challenge that he may have made against the act shall be studied.

5.- If it’s decided that the notification was legally carried out and, as a consequence, the challenge against the act was filed late, the unconformity relief shall be dismissed.

9) Inadmissibility

The unconformity relief is inadmissible when it is asserted against administrative acts:

1.- That does not affect the legal interest of the appellant.

2.- These are resolutions issued in administrative appeals or compliance with judgments.

3.- That have been challenged before the Federal Court of Administrative Justice.

4.- That are the subject of another legal remedy or trial pending resolution before an administrative authority or jurisdictional body.

5.- That have been consented to because the unconformity relief was not filed in the terms indicated by the regulations.

6.- That it is connected to another act that has been challenged through some appeal or different legal remedy.

7.- That have been administratively revoked by the issuing authority.

8.- When the records in the file show that the challenged act has not existed or been rendered ineffective.

9.- In other cases, the inadmissibility results from some legal or regulatory provision.

10) Dismissal

On the other hand, dismissal, that is, a resolution that specifies that due to a technical impediment, the merits of the unconformity relief cannot be resolved, shall proceed when:

1.- There is an express withdrawal by the appellant.

2.- When, during the procedure, one of the causes of inadmissibility that is already mentioned appears or occurs.

3.- In the event that the appellant dies during the procedure, if his claim is non-transferable or if his death leaves the legal remedy without substance.

11)  Processing of the Unconformity Relief

Once the unconformity relief is admitted, the Secretary of the Delegation Advisory Council shall request the relevant reports from the Mexican Social Security Institute departments participating in the contested act, which must be submitted within 10 calendar days. In any case, given the circumstances of the case, the secretary may set a longer term.

A) Permitted Evidence

With regard to the unconformity relief, evidence consisting of documents, reports, expert opinions, visual inspection, and testimony shall be permitted. Evidence shall be admitted as long as it is strictly related to the controversy and is not contrary to law or morality.

B) Evidence Period

The evidence must be submitted within 15 business days of its admission, which may be extended for an equal period and for one time only at the discretion of the Secretary of the Delegation Advisory Council.

C) Ex Officio Evidence

The Delegation Advisory Council or the secretary of said collegiate body shall have the power to conduct proceedings more effectively when they consider that the evidence provided is insufficient.

D) Special Rules For Evidence

The following rules are included among the evidence permitted for the unconformity relief:

1.- Documentary evidence that is not in the possession of the appellant but that is legally available to him and that he indicated in his writing shall be required to present the evidence within 15 business days, counted from the date on which the relevant notification takes effect, warned that if he does not do so within the indicated period, the evidence shall be declared void.

2.- When the expert evidence is offered, the points on which it shall be based will be indicated, and an expert shall be appointed, who must have a duly registered title of the profession related to the subject on which he will issue his opinion. If he does not comply with this, the evidence shall be rejected.

On the other hand, once the expert evidence has been admitted, the appellant must present his expert to the investigating authority within 5 working days from the day the admission order is notified for the expert to accept the position.

Once the position has been accepted, the expert must submit his opinion within 15 business days following the date of acceptance of his assignment. If the opinion is not submitted, the expert evidence shall be declared void.

Only once, for a justified reason—such as his death—and before the 15 business day period expires, the appellant may request the replacement of his expert, indicating the name and domicile of the new person proposed. The new expert, within a period of 5 business days counted from the day after the notification of the order that replaced the previous expert takes effect, to accept the position, must present his opinion within 10 working days following acceptance.

3.- The ocular inspection evidence shall be offered, establishing the points on which it must be based. It shall be carried out by whoever is designated by the secretary of the Delegation Advisory Council.

4.- Confessional evidence (declaration) shall not be admitted. Still, reports submitted by the departments or officials of the Mexican Social Security Institute about the case subject to the unconformity relief can be admitted.

5.- Testimonial evidence shall be offered indicating the names and domiciles of the witnesses, who must be presented by the offeror, except in the case where the witnesses are personnel of the Mexican Social Security Institute or the offeror declares, under oath, that he is unable to present them.

The respective interrogation must accompany the offer of this evidence unless the interested party prefers to ask the questions verbally.

Finally, if the name or domiciles of the witnesses offered are not indicated, the appellant shall be required to provide them within 5 business days, counted from the day following the day on which the notification takes effect, being warned that if this is not done within the indicated period, the evidence shall be deemed not to have been offered.

12) Resolution

Once the period for presenting evidence has concluded, the Secretary of the Delegation Advisory Council shall prepare the draft resolution of the unconformity relief within 30 business days.

Once the draft resolution has been prepared, the Secretary shall submit the draft to the Delegation Advisory Council for discussion and approval of the resolution, which, in any case, must be issued within 15 business days following the date on which the draft resolution is formulated.

A) How Resolutions Must Be Issued

According to the regulations, the resolutions issued in the unconformity relief must be made by unanimity or a majority vote of the Delegation Advisory Council or the Technical Council.

In this sense, each of the labor and employer sectors and the government representation shall have the right to one vote. If there is a tie in the first vote, the vote shall be repeated, and if there is a tie for the second time, the president of the respective council shall have the casting vote to decide the issue.

On the other hand, the resolution issued shall not be subject to any special rule. However, it shall deal with all the reasons for the dissident’s challenge and decide on all his claims.

B) Dissenting Vote

If applicable, councilors who disagree with the approved resolution may formulate a reasoned dissenting vote, which will be added to the file. The dissenting vote shall be presented to the Secretary of the Delegation Advisory Council within 3 business days following the resolution’s discussion.

C) Right to Veto

The President of the Delegation Advisory Council shall have the power to veto the draft resolution of the collegiate body when it implies non-compliance with the Social Security Law or its regulations or when it does not comply with the agreements made by the Technical Council or the general guidelines of the Mexican Social Security Institute.

The effect of the veto shall be to suspend the approval of the draft resolution, which will be sent with the administrative file of the unconformity relief by the Secretary of the Delegation Advisory Council to the General Secretary of the Mexican Social Security Institute so that within a period of 5 business days a new draft resolution is prepared and presented to the Technical Council so that it may make a final decision.

D) Notification

Resolutions issued on this legal remedy shall be notified to the appellant party within 5 business days of their signature.

E) Execution

The resolutions issued in the unconformity relief shall be executed within 15 business days, except where the Secretary of the Delegation Advisory Council extends the term.

13) Revocation Relief

Against the resolutions of the Secretary of the Delegation Advisory Council regarding the admission or rejection of the unconformity relief or the evidence offered, their revocation must be requested before the corresponding Delegation Advisory Council. This request must be submitted in writing within 3 business days following the day on which the notification of the appealed agreement takes effect, indicating in the same writing the arguments aimed at the revocation of the contested act. This legal remedy shall be decided on immediately at the council’s next session.

Regarding this legal remedy, it’s pertinent to clarify that there are conflicting criteria in the circuit collegiate courts since the revocation relief must be attempted before going to the Federal Administrative Court of Justice for some, while for others, it should not. For example, see the following criteria: REVOCATION RELIEF PROVIDED FOR IN ARTICLE 31 OF THE REGULATIONS OF THE UNCONFORMITY RELIEF. ITS EXHAUSTION IS OPTIONAL, PRIOR TO THE NULLITY TRIAL and REVOCATION RELIEF PROVIDED FOR IN ARTICLE 31 OF THE REGULATIONS OF THE UNCONFORMITY RELIEF. IT IS NECESSARY TO EXHAUST IT BEFORE STARTING THE ADMINISTRATIVE LITIGATION BEFORE THE FEDERAL COURT OF FISCAL AND ADMINISTRATIVE JUSTICE.

In the absence of a binding precedent that settles the issue, I recommend that the revocation relief be filed. First, it is faster to process and resolve, and second, the criterion that it must be exhausted before resorting to the Administrative Litigation Trial seems more plausible to me.

This is so because, although the unconformity relief is optional, it’s also true that in the matter of legal remedies, the doctrine and the precedents themselves have been in agreement in the sense that if you opt for an optional relief, the legal remedies that it may contain must follow the fate of the main relief, that is, exhaust them before going to another instance. Therefore, it is only a matter of time before there is a criterion in that sense.

14) Suspension of the Execution

The suspension of a tax liability based on the unconformity relief is possible, but the following rules must be complied with:

1.- The administrative enforcement procedure shall be suspended by the Secretary General of the Mexican Social Security Institute or the Delegation Advisory Council if requested from filing the unconformity relief or during its processing.

2.- The suspension shall be subject to the applicable regulations of the Federal Tax Code, and the guarantees established by the aforementioned ordinance must be granted, remaining in the custody of the corresponding treasury services (a topic that I will discuss in a future blog entry)

3. Upon receiving the request for suspension of the administrative enforcement procedure, the council secretary forwards it to the Head of the corresponding Collection Office, who assesses the guarantee and informs the secretary so that he may issue the appropriate agreement.

4.- Finally, if the resolution is favorable to the appellant, the guarantee he has granted shall be immediately canceled to the extent that the resolution determines, or the conditional payment that has been made shall be returned.

By Omar Gómez

Mexican Tax, Administrative, and Constitutional Attorney

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Contact me at [email protected]