In an increasingly complex tax landscape, a tax return error is easily made. Eand error in an amount, a forgotten document, unclear regulation, etc. The new program law therefore wishes to introduce that a tax increase of 10% is not automatically imposed on a taxpayer who has acted in good faith.
In addition, the taxpayer is also once given the opportunity to rectify the failure to declare income (or to declare it correctly) without any prosecution being possible as a result.
First mistake? No fine if you are in good faith
Context
Recently there have been quite a few discussions with the administration, culminating in proceedings before the Constitutional Court, surrounding the application of a tax increase from 10% at a first breach in good faith and the consequent loss of loss deductions in the corporation. The administration could, but was not required to, on a first offense waive of this tax increase.
The Arizona government's new program law now puts an end to this discussion. For assessments registered as of the publication of this new law in the Belgian Official Gazette, the administration must Mandatory waiver of tax increase from 10% when it comes to a first offence that bona fide was committed.
In addition, as a taxpayer, you will be suspect acted in good faith. It is the administration that will have to proofs That the act was done with the intent to evade tax.
As a taxpayer, when do you act in good faith?
Good faith means that there is a error committed by a misunderstanding, without intention or that a mistake was made by the administration. An example of good faith is misreading a certificate and consequently entering the wrong amount.
What then is not accepted as good faith?
The explanatory memorandum to the program law gives as an example the knowingly deduct expenses that you are not allowed to deduct Whether the concealment of income while knowing they are taxable. Thus, if the administration can show that there is no good faith, then the 10% tax increase will be imposed.
On the question of whether or not there is good faith can no black and white answer be given. The explanation of the law does give the following example: a taxpayer uses 20% of the property professionally. If it is estimated and declared that 30% of the property is used professionally, this can (subject to proof to the contrary) be presumed to be in good faith. Suppose it is estimated and declared that 80% of the property is used professionally, then the absence of good faith can be argued by the administration, as this is an overestimate of professional use.
The flip side of the coin: what if the next mistake is made?
The waiver of the tax increase for a first good faith offense is offset by the fact that for a new violation in good faith within the four years a tax increase of 20% is imposed. Thus, the first offense is included in the history of offenses committed by the taxpayer. To this end, to the extent necessary, the Arizona government will still amend the Royal Decree that determines the brackets of the tax increase.
Do you after the lapse of four years since the first offense again a good faith offense? Then the first offense will do not count in the history. This means that the waiver of the 10% tax increase can be appealed again for this new offense.
Beware of ex officio assessment
When no return is filed and the administration thus has to prepare its own assessment (ex officio attack), then there can be no invocation of good faith. Indeed, it is hard to imagine that good faith would still be present in the case of an ex officio assessment, since there will have been reminders before the preparation of the return.
In some cases, this may indicate a deliberately preventing the fiscal investigation. Thus, the tax increase of 10% cannot be waived in this case.
Do you have questions about this article?
Your client manager is ready to assist and proactively advise you.