News

Ombudsman Diana Kovacheva has sent a proposal to the Parliamentary Budget and Finance Committee for amendments to the provisions of Article 22c and Article 22d of the Personal Income Tax Act. Prof. Kovacheva insists that amounts reimbursed by employers to workers and employees who have used tax benefits for children and children with disabilities be made non-seizable. GERB MP Alexander Ivanov and his colleagues sided with the Ombudsman’s legislative proposal and tabled it for discussion before the Budget Committee yesterday. 

According to the Public Advocate, the vote for this legislative proposal will ensure actual support in raising children and children with disabilities by parents in labour and official relations where the funds will be aimed to cover the needs of the children and not the obligations of their parents.

“I noted this problem in my 2021 Report; the issue was referred to me by citizens and there are no express provisions for it. When distraint is imposed on a debtor’ bank accounts and other receivables, it is envisaged that, in view of the need for funds to cover urgent needs of the debtor, certain receivables are fully not subject to seizure (for example, children benefits, social benefits, unemployment benefits, maternity payments, etc.), while others, such work income and pensions, are partially seizable. Any receivables other than those funds identified as non-seizable by the law may be deducted to satisfy creditors,” Diana Kovacheva notes.

She points out that, pursuant to Article 444 (8) of the Civil Procedure Code, enforcement may not target the following items of an individual in debt: items and receivables defined not to be subject to involuntary enforcement as provided for in another law. Such provisions are also present in the Social Security Code, the Persons with Disabilities Act, the Family Benefits for Children Act and others. 

“However, there are no express provisions to make non-seizable the amounts employers reimburse when tax benefits for children or children with disabilities are used and this gives rise to diverse practices on the part of enforcement agents when transferring amounts to parental accounts under distraint,” the Ombudsman points out.

She adds that a tax benefit is a statutory possibility to the advantage of the respective person to reduce their tax obligations if the conditions set out in the law are fulfilled. 

“It is true that the case does not concern social benefits or compensation but it still concerns a measure of a highly social nature. The tax benefits laid down in the provisions of Article 22c and Article 22d are for the working parents of children and for the parents of children with disabilities. It is a measure of actual support for families raising their children while being in labour or official relations and paying taxes and social security,” Diana Kovacheva points out. 

She adds that the measure is targeted against the demographic crisis and, according to the motivation of the legislator to adopt these provisions, the purpose is to transform the model – from incentives through social support to incentives through tax preferences.

“At present, in practice, the support of the State for working parents is deducted by enforcement agents inasmuch as there is no express provision making these amounts non-seizable. Rather than going towards the family budget and being used for the needs of children and especially children with disabilities, these amounts are spent to cover debts of parents when distraint has been imposed,” the Ombudsman emphasises.