How TaxPro is bringing down the tax system over alleged cash commissions
Initial situation: The tax office assumes undeclared commission income
Our client came under investigation by the tax authorities because of alleged commission income.
The tax office accused him of receiving commissions and not declaring these earnings.
The sums involved were considerable, totaling 85,000 euros.
Based on this, the tax office increased the income tax and began enforcement proceedings.
The client defended himself.
TaxPro took over the case.
YouTube Video: Cash & Tax Office - New ruling is here!
Strategy: If the tax office demands tax, it must prove its case
The decisive issue was the evidence.
The tax office based its additional tax assessment in particular on tables and findings from the tax investigation authorities. In the tax office’s view, these were supposed to prove that our client had personally received the commissions.
TaxPro challenged precisely this basis.
After all, a table containing figures does not answer the decisive question:
Who actually received the money – and to whom should this income be attributed for tax purposes?
TaxPro submitted documents and certified translations documenting the actual payments.
At the same time, TaxPro demanded the complete investigation files.
This was particularly important because key documents on which the tax allegations were based – so-called collective information requests sent to customers – had not been made available in full to either TaxPro or the court. The tax office ultimately admitted this itself.
First success: Fiscal Court stops the additional tax assessment
TaxPro applied to the Hessian Fiscal Court for a suspension of enforcement to protect our client against enforcement action.
Successfully.
The First Senate of the Hessian Fiscal Court suspended enforcement of the contested income tax assessments. The tax office was ordered to bear the costs of the proceedings.
The court’s reasoning was particularly important:
The tax office generally bears the burden of proving that the alleged income is attributable to our client for tax purposes.
And that was precisely where serious doubts existed.
The Fiscal Court found that the documents submitted by the tax investigation authorities were only fragmentary. The tables did not show to whom the commissions had actually been paid. Nor did the documents reveal how the tax investigation authorities had attributed the amounts to our client.
Tax office demands security – TaxPro succeeds here too
The tax office wanted the suspension of enforcement to be granted only against security.
In support of its position, it referred, among other things, to our client’s foreign bank accounts and connections abroad.
TaxPro objected.
The mere existence of foreign bank accounts and connections abroad did not mean that subsequent enforcement of the tax claim would be at risk.
The Fiscal Court agreed with TaxPro on this point too.
The judges rejected the requirement for security. The suspension of enforcement was therefore granted without security.
Then the complete success: The tax office backs down in the main proceedings too
Following the success in the interim proceedings, the main court proceedings continued.
Then came the decisive development:
The tax office completely abandoned the disputed additional tax assessment. It dropped the alleged commission income.
TaxPro had therefore achieved the objective of the court proceedings.
The additional tax assessment, including interest and the solidarity surcharge, had been successfully defeated.
Result: TaxPro wins – the tax office bears the costs
The outcome was a complete success:
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The tax office was ordered to bear the costs of the interim court proceedings.
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The tax office was also ordered to bear the costs of the main court proceedings.
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In addition, the tax office had to reimburse the costs of the objection proceedings.
What you should take away from this case
The tax office cannot attribute income to you for tax purposes simply because your name appears on a list, in a table or in an analysis prepared by the tax investigation authorities.
If the tax office seeks to attribute income to you, it must be able to prove the factual basis for doing so.
Particularly where alleged cash income, commissions and tax investigations are involved, it is therefore worth scrutinising the evidence carefully:
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Where did the data come from?
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Who actually received the money?
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How was the payment attributed to the taxpayer?
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What original documents are held by the tax investigation authorities?
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Did the tax office also take exculpatory evidence into account?
This case demonstrates one thing clearly:
It is not enough for the tax office simply to allege that income was received. Ultimately, it must be able to prove its tax claim.
Is the tax office alleging that you failed to declare income?
TaxPro examines the evidence behind the tax claim – and challenges the tax office when assumptions are turned into tax liabilities.
Contact us now – before an unproven allegation becomes your tax liability.