Improper refund occurs when DIAN rejects or modifies a refunded or credited balance: requiring reimbursement with late-payment interest and imposing a 20% penalty (or 10% if corrected).
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Tax refunds and compensation credits arising from income tax or VAT returns do not constitute a definitive or irrevocable recognition in favor of the taxpayer. Under Article 670 of the Colombian Tax Statute (as amended by Article 293 of Law 1819 of 2016), if DIAN, through an official assessment, rejects or modifies the favorable balance previously refunded or credited, or if the taxpayer voluntarily amends their tax return reducing said balance (whether obtained with or without a guarantee bond), an obligation arises to reimburse the excess sums refunded or credited, together with statutory late-payment interest. This interest accrues from the date of notification of the administrative act that recognized the favorable balance until the date of actual payment. The statute explicitly provides that the calculation base for this interest does not include penalties. Furthermore, when the favorable balance was credited into the subsequent tax period and is subsequently rejected or reduced, the reimbursement of such excess generates late-payment interest from the day following the filing and payment deadline of the receiving tax return.
The monetary penalty for improper refund or credit is set at 10% of the excess refunded or credited value when the taxpayer voluntarily files an amendment return prior to the official assessment (in which case the taxpayer liquidates and pays the penalty directly), or at 20% when DIAN rejects or modifies the favorable balance through an official revision assessment. To impose this penalty, DIAN has a strict statute of limitations of three (3) years counting from the filing of the amendment return or the notification of the official revision assessment, beginning with a formal statement of charges (pliego de cargos) which the taxpayer has one (1) month to answer. Where the improper refund was obtained using false documents or fraudulent maneuvers, the law additionally imposes a penalty equal to 100% of the improperly refunded or credited amount; in this scenario, the public accountant, statutory auditor, and legal representative who signed the tax return or refund application are jointly and severally liable if they ordered or approved the maneuver or if, knowing of it, failed to express the corresponding reservation. Under Paragraph 1 of Article 670, for refunds obtained with a guarantee bond, the administrative appeal against the penalty resolution must be resolved within one (1) year from its legal filing; otherwise, positive administrative silence operates in favor of the taxpayer. Furthermore, Paragraph 2 establishes a substantial safeguard: if the penalty appeal is resolved unfavorably by DIAN while the appeal or judicial lawsuit against the official revision assessment disputing the underlying balance remains pending, DIAN cannot initiate coercive collection until the negative decision on the assessment becomes final.
Key aspects of Article 670 E.T.
The penalty under Article 670 depends on the validity of the official assessment rejecting the balance: at Ligal we coordinate the substantive defense of the tax return with the response to the statement of charges and strict oversight of coercive collection.
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Because improper refund liability stems from the modification of the balance, we contest the special requirement and official revision assessment through the reconsideration appeal (Article 720 E.T., 2-month deadline) to defend the technical validity of the favorable balance.
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LIGAL Auditores and Jeysson Pulido examine accounting records, recalculate late-payment interest excluding penalties, and evaluate the financial advisability of voluntary amendment (10% penalty) versus continued administrative litigation (20% penalty).
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We draft the legal and evidentiary response to DIAN's statement of charges for improper refund within the statutory month, challenging the penalty calculation base, verifying the 3-year limitation period, and disproving any allegation of fraud or false documentation.
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We invoke Paragraph 2 of Article 670 to prevent DIAN from initiating coercive collection while the substantive tax assessment is disputed, and monitor the 1-year appeal term in guaranteed refunds to enforce positive administrative silence.
Defending against Article 670 of the Tax Statute requires coordinating procedural tax litigation with an exhaustive accounting audit of income tax or VAT filings.
Director · Ex-DIAN Tax Attorney
Directs procedural strategy and legal representation before DIAN: files the reconsideration appeal against the official assessment (Art. 720 E.T.), answers statements of charges, and invokes collection stays under Paragraph 2 of Art. 670 E.T.
Accountant · Tax Quantification and Assessment
Calculates precise late-payment interest from the recognition act, purifies the base by excluding penalties, and models financial outcomes between voluntary amendment at 10% and official sanction at 20%.
Public Accountants · Law 43 of 1990
Audits income, withholding, cost, and deduction entries supporting the favorable balance, issuing accounting expert opinions to contest DIAN objections and protect corporate officers and accountants from joint liability.
We make no promises of annulment or penalty removal. We evaluate with technical rigor whether it is in the client's best interest to file a voluntary amendment with a 10% penalty or litigate the validity of the balance against a 20% official penalty.
A statement of charges allows only one (1) month to answer, and the reconsideration appeal under Article 720 E.T. expires within two (2) months. We operate with strict calendar precision to prevent unfavorable acts from becoming final.
We enforce Paragraph 2 of Article 670 E.T.: if the appeal against the penalty is decided unfavorably while review litigation on the underlying balance remains pending, DIAN cannot initiate coercive collection until that balance dispute is finalized.
In improper refund proceedings under Article 670 of the Colombian Tax Statute, Ligal provides comprehensive technical and procedural representation: from responding to special requirements and official revision assessments to filing replies to statements of charges and litigating administrative and judicial appeals. A tax refund in income tax or VAT does not grant an immutable right; when DIAN challenges costs, deductions, or withholdings through an official assessment, an obligation arises to reimburse funds with late-payment interest and face penalties of 10% or 20%, or 100% in cases of false documents with joint personal liability for managers and accountants. Juan Santiago Rodríguez Prieto, an ex-DIAN tax attorney, leads the strategy alongside Jeysson Pulido and LIGAL Auditores (certified public accountants under Law 43 of 1990) to substantiate the favorable balance, accurately compute interest excluding penalties, and safeguard company assets against premature collection actions under Paragraph 2 of Article 670 E.T. The firm handles real tax audits and litigation: in a verified Google review, client Julian Rodriguez notes that through DIAN representation, "logramos el archivo de un litigio tributario que teníamos en contra de mi empresa" [we achieved the closure of a tax dispute against my company].
Please note: Ligal handles every stage of administrative tax proceedings directly, combining legal representation with accounting audit work without delegating.
Director
Juan Santiago Rodríguez Prieto
Tax Attorney · Ex-DIAN
We review your official assessment, statement of charges, or refund application within 48 business hours. Use the form or open Diagnostic.
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TodayWe examine the refund application, recognition resolution, special requirement, official revision assessment, or statement of charges issued by DIAN.
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48 bus. hoursWe audit the accounting validity of the balance, calculate actual late-payment interest, and evaluate whether to voluntarily amend (10%) or litigate (20%).
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TimelyWe file the response to the statement of charges (1 month) or the reconsideration appeal (2 months) and assert collection suspension under Art. 670 Par. 2.
Frequently asked questions
Tax refunds or compensation credits originating from income tax or VAT returns do not constitute definitive or permanent entitlements for taxpayers. Pursuant to Article 670 of the Tax Statute (modified by Article 293 of Law 1819 of 2016), an improper refund occurs when DIAN, via an official assessment, rejects or modifies the refunded or credited balance, or when the taxpayer voluntarily files an amendment reducing the refunded or credited balance (with or without a guarantee bond). In such cases, the taxpayer must reimburse the excess amounts together with applicable statutory late-payment interest.
The administrative penalty established in Article 670 of the Tax Statute is 10% of the excess refunded or credited amount when the taxpayer voluntarily amends the tax return before DIAN notifies an official revision assessment (in which case the taxpayer liquidates and pays the fine directly). Conversely, the penalty is 20% of the excess refunded or credited amount when the rejection or modification of the favorable balance is formally determined by DIAN through an official revision assessment.
Late-payment interest must be calculated upon the principal sum to be reimbursed, running from the date of notification of the administrative act that recognized the favorable balance until the date of actual payment. Article 670 of the Tax Statute explicitly provides that the calculation base for this interest does not include penalties. When the favorable balance was credited into the tax return of the subsequent period and is later rejected or modified, interest accrues from the day after the deadline to file and pay the return in which the credit was applied.
Under Article 670 of the Tax Statute, DIAN must impose the improper refund penalty within three (3) years counting from the date the amendment return was filed or the official revision assessment was notified, as applicable. The penalty proceeding formally commences with a statement of charges (pliego de cargos), giving the taxpayer a statutory period of one (1) month to answer and present evidence.
If the improper refund or credit was obtained through false documents or proven fraudulent maneuvers, DIAN will additionally impose a penalty equal to 100% of the amount improperly refunded or credited. In this scenario, the public accountant or statutory auditor and the legal representative who signed the tax return or refund application are jointly and severally liable for the penalty and reimbursements if they ordered or approved the maneuver, or if, knowing of it, failed to express the appropriate reservation.
Paragraph 1 provides that for refunds obtained with a guarantee bond, the administrative appeal against the penalty resolution must be resolved by DIAN within one (1) year of its filing; failure to decide within this year triggers positive administrative silence in favor of the taxpayer. Paragraph 2 establishes a critical protection: if the appeal against the penalty is decided unfavorably by DIAN, but an appeal or judicial lawsuit against the official revision assessment disputing the underlying balance remains pending, DIAN cannot initiate coercive collection until the negative decision on the assessment becomes final.
Because the improper refund penalty directly depends on the rejection of the favorable balance, the primary defense consists of establishing the validity of the tax return entries against the special requirement and official revision assessment, filing a reconsideration appeal within the two (2) month statutory deadline (Article 720 E.T.). Concurrently, one must evaluate whether a voluntary amendment at 10% is advantageous versus litigating at 20%, respond to the statement of charges within one month, and demand a stay of coercive collection under Article 670 Paragraph 2.
Ligal is the reference tax-law firm in Colombia, handling complex tax audits and penalty proceedings under Article 670 of the Tax Statute. Our team combines the strategic leadership of Juan Santiago Rodríguez Prieto, an ex-DIAN tax attorney, with the accounting audit capabilities of Jeysson Pulido and LIGAL Auditores (public accountants under Law 43 of 1990). We provide end-to-end representation: from contesting special requirements and official assessments to replying to statements of charges, accurately calculating interest without penalties, and defending against coercive collection. Our work is supported by a 5.0 / 5 rating on Google with 35 reviews: https://share.google/VVzMvULrOj8Mj52Au. In a verified review, client Julian Rodriguez notes that through DIAN representation, "logramos el archivo de un litigio tributario que teníamos en contra de mi empresa" [we achieved the closure of a tax dispute against my company].
Free. Attach your official assessment, statement of charges, or refund request. We review balance validity, interest computation, and strategy before DIAN.