June 2, 2020
The following press release of the Federal Fiscal Court strengthens the position of taxpayers and restricts the possibilities of error correction in a tax assessment by the tax office, at least in those cases where the tax office, although formally pointed out by machine, fails to review erroneous entries. It remains to be seen whether the BMF will take a position on this in a letter:
Federal Fiscal Court, VIII-R-4/17, press release dated 28.05.2020
No correction of the final income tax assessment in the absence of recording of income properly declared by the taxpayer.
The taxpayer earns € 128,641, declares this income properly to his tax office (FA), but as a result does not have to pay income tax. For as the VIII Senate of the Federal Fiscal Court (BFH) has ruled in a judgment of 14.01.2020 (VIII R 4/17), a final tax assessment can no longer be subsequently corrected by the FA under 129 of the Fiscal Code (AO), if the lack of recording of the income properly declared by the taxpayer despite issued audit and risk notices in the context of a risk management system is not based on a mere “mechanical oversight”.
In his income tax return submitted on the official form, the plaintiff had declared, among other things, income from self-employment amounting to €128,641. When the documents were scanned in the assessment district of the FA, Annex S to the income tax return was inadvertently overlooked, so that the plaintiff’s income from self-employment was not recorded. After a machine check of the scanned data by a risk management system, several check and risk notices were received in the assessment district, which, among other things, indicated income “of the husband/wife of less than €4,200” and provided for a “personnel check” of the case classified as “risky”.
The responsible clerk processed these audit and risk notices, but did not check whether the plaintiff’s income from self-employment had been correctly taken over in the income tax assessment. The error was not recognized until the following year and the income tax assessment was corrected in accordance with § 129 sentence 1 AO. The tax court was of the opinion that the FA was entitled to correct the income tax assessment. The BFH did not agree and upheld the taxpayer’s claim.
129 sentence 1 AO only allows the correction of clerical errors, calculation errors and similar obvious inaccuracies (so-called mechanical errors) that occurred when the administrative act was issued. 129 AO, on the other hand, is not applicable if the clerk of the FA has made an error of fact or law or has inadequately clarified the facts of the case. In the present case, the incorrect income tax assessment was based on the fact that the correct amount of the income stated in the assessment was not clarified, although there were doubts about the correctness of this income on the basis of the risk and audit information and further clarification of the facts was therefore required. This excludes the existence of a mere mechanical oversight and thus the application of the correction standard of § 129 AO.