Tax (penalty) consequences of discretionary assessments.
Workshop by Verena Grossmann and Rolf Benz on the occasion of the ISIS) seminar of 09 May 2023 entitled "Tax (Penalty) Consequences in Discretionary Assessments".
Case 1: Discretionary assessment
1. facts of the case
1.1 Fiscal year 2020
Hans Müller is single, resides in the city of Winterthur, is the sole shareholder and managing director of H. Müller AG. For the tax period 2020, he was assessed as follows based on his correctly completed tax return: Taxable income: CHF 180,000 Of which income from securities: CHF 12,000 Refund claim for withholding tax (35%): CHF 4,200 Taxable assets: CHF 800,000
1.2 Fiscal year 2021
Since Hans Müller did not submit a tax return for the 2021 tax period despite a reminder, he was assessed as follows on November 23, 2022, according to dutiful discretion:
- Taxable income: CHF 50,000
- Taxable assets: CHF 0
- Withholding tax refund claim: CHF 0
Hans Müller's actual circumstances in the 2021 tax period were as follows:
- Taxable income: CHF 230,000
- Of which securities income with withholding tax deduction: CHF 15,000
- Withholding tax deduction (35%): CHF 5'250
- Taxable assets: CHF 1'000'000.
During the processing of the 2022 tax return, which Hans Müller submitted on time on February 10, 2023, the tax commissioner obtains an extract from the SVA and notices on May 9, 2023 that the 2021 tax assessment was much too low.
1. what principles must the tax authority observe when making a discretionary tax assessment?
2. What is the tax authority's duty to investigate discretionary assessments?
3. is the present discretionary taxation null and void?
4. Can the under-taxation that occurred in the 2021 tax period be corrected by the tax authority? If so, in which procedure?
5. Does Mr. Müller make himself liable to prosecution by not filing the tax return?
6 What further consequences under criminal tax law does Hans Müller have to expect?
7. are the tax evasion proceedings criminal or administrative?
8. how is the penalty to be assessed?
9. Must Hans Müller expect to be entered in the criminal register?
10.Is Hans Müller entitled to a refund of withholding tax?
11.What are the overall financial consequences for Hans Müller in the worst case?
12.What could Hans Müller have done better at a later date despite not filing the 2021 tax return?