Tax error? Make sure you’ve already objected anyway

To what extent is a tax assessment truly irrevocable? Many savers who realized last week that they won’t get compensated for much of the taxes paid in Box 3 have this question. The government decided on Friday that people who did not contest their wealth tax estimate for the years 2017 to 2020 may have paid too much but won’t get a cent. The main argument: Compensation for all is too expensive – and certainly in times of bursting energy prices and hyperinflation – not important enough.

It was announced earlier that people who objected, i.e. about 60 thousand savers, were entitled to a refund of the excess tax on their interest. At the end of last year, the Supreme Court ruled that the way the government taxes assets is inconsistent with European law. The objectors will receive a total of 2.8 billion euros in return.

The savers who did not object felt deprived. They faithfully paid what the tax authorities demanded of them, after all, the law was the law. After the Supreme Court ruling, some of them turned to the courts to ask whether they were entitled to compensation at all. After all, it was the tax authorities, with the legislature in the background, that got it wrong here. Responsible Secretary of State Van Rig (Taxes, CDA) has hinted in parliamentary debates on the savings debacle that he is open to accommodating non-dissidents as well. It would cost at least another 4 billion euros, he added. Even if it was possible, the implicit message was here, then the question was whether you wanted it, financially.

Supreme Council

On May 20 of this year, the sobering response from the Supreme Court came again. He stated that the non-objectors had no legal basis for compensation. Tax assessments for the years 2017 to 2020 have already been finalized: Inspector signature below, file closing.

Simply put, a taxpayer who has filed a tax return for a particular year (always before May 1st of the following year) has six weeks after the final assessment has been determined by the tax authorities to file an objection. After the six-week period is over, the assessment is permanently fixed.

The 60,000 savers who received compensation have now taken advantage of that objection period. According to the Supreme Court, tens of thousands of victims who did not do so lost their right to compensation.

Progressing

Many people think that a tax assessment is really final only if it has not been reconsidered in the five years following that assessment. This is partially true. The tax authorities have the right to file an additional claim up to five years after the assessment. This requires “new facts”. Think of someone who should have filed a tax return but didn’t, or someone who didn’t knowingly declare assets (black savers), an estimate of someone’s income or taxable amounts that turned out to be too low. However, there are limitations; For example, in some cases, the additional claim must in any case amount to 30 percent of the properly owed tax. However, this payback period works only in one direction: only the tax authorities can take revenge on the previous assessment.

Those who have paid too much tax themselves, such as cheated savers, can request a lower assessment outside of the normal six-week objection period. This is called a discount request. The tax authorities appreciate this request and may decide that the tax estimate is already too high. Then the inspector can still reduce the rating. This request for reduction may be submitted for up to five years after the year to which the estimate, payment or decision relates. For savers who oppose valuation as of 2017, they have until December 31, 2022.

This saves the possibilities, you think. But it is not included in the so-called enforcement law. This is because it states that no reduction is granted ex officio “if the inaccuracy of the tax assessment is caused by case law issued only after such assessment has been irrevocably proven.” If the rules change after the final evaluation of the appraisal, the right to formal reduction will subsequently lapse.

This is exactly what the Supreme Court ruling of May 20 this year was based on. His rule at the end of 2021 was already in place, after which savers still applied to reduce the rating. In other words: no compensation.

The only option that remains open is for the finance minister to announce that the official reduction will still be allowed for savers who have not objected and want to be compensated. Outside the strict rules of law enforcement. But Minister Kag (Finance, D 66) did not. Not now anyway.

object by default

This opened the way for the Council of Ministers to take a decision not to compensate savers who did not object. Where van Rijk first responded with understanding – “It’s not legally required, but I also understand people who suggest they are offended in terms of their sense of justice” – the counter has now remained closed. No compensation. Legally waterproof, politically inconvenient.

This raises the question of whether taxpayers should henceforth file a formal objection to their provisional estimate. After all, anyone who decided not to do so with a capital gains tax in recent years is now out of luck. If this objection is now made by definition, the taxpayer is always in the right place. The question is whether the overburdened tax authorities can still handle that, a few million objections a year.