Amendments to Assessments and Tax Decisions - Part 3: Nullity of an Assessment / Tax Decision

If a taxable person disagrees with an assessment or a tax decision, they can contest it. However, once the appeals period has expired and the decision becomes legally binding, only extraordinary legal remedies can be taken. Today we explain in which cases an assessment/tax decision is still considered null and void and therefore ineffective.

In (rare) cases, a tax decision or an order may be null and void, making it completely invalid and irrelevant. These cases are rare because faulty administrative acts are usually not void but only contestable. By not contesting, these acts then become legally valid.

According to the case law of the Federal Court, a nullity occurs even after the expiration of the legal remedy period if:

1. 1. the defect involved is particularly severe,
2. 2. it is obvious or at least easily recognizable, and
3. 3. legal certainty is not seriously jeopardized by assuming nullity.

An example of this can be found in the judgment 2C_679/2016 and 2C_680/2016: A doctor living in the canton of Zurich, who earned about 250,000 francs per year, was depressive and therefore apparently unable to submit her tax return. From 2004 to 2012, she failed to submit despite reminders and was assessed for state and direct federal taxes as deemed appropriate. She let all these assessments go unchallenged and become legally binding. For punitive reasons, the tax authorities repeatedly increased the assessed income. For these tax demands, enforcement procedures were predominantly initiated, and wage garnishments were carried out. In 2006, the tax authority received garnishment documents from the debt enforcement office, which showed that at that time the taxable doctor had no attachable assets anymore and that her actual income was significantly below the assessed amount. Nevertheless, the tax authority continued to increase the assessed income until 2012, reaching 750,000 francs. The Federal Court emphasized that the assessment should not happen for fiscal motives or to punish the taxpayer. It declared the discretionary assessments null and void from the moment the tax authorities knew about the actual asset and income situation of the doctor. Then the defect should have been recognizable to the tax authorities.

In the next article of our series "Amendments to Assessments and Tax Decisions" we will explain the extraordinary legal remedy of revision.

‍Private tax declaration made easy – with Taxea.ch

‍You can easily create your private tax declaration using our tax app taxea. Learn more about taxea here www.taxea.ch