The appeal against a tax assessment is the first and most important remedy in the taxation procedure. It enables the tax office to change the entire decision – in favor of, but also to the disadvantage of, the taxpayer. If the latter is the case, one speaks of the so-called escalation. After the change by the tax office, the notification would be less favourable for the taxpayer than it was before the change – for example, because the tax payable increases.

“Deprecation” does not mean that the tax office personally has something against the taxpayer (at least in most cases). Rather, the term is an expression of a certain awkwardness on the part of the legislator to summarize the adverse modification of an administrative act in just one word.

1st basic features of the opposition to tax rulings

Taxpayers who are dissatisfied with a decision of the tax office can defend themselves against the corresponding decision by means of the objection. It is the legal remedy according to § 347 AO and concerns in particular the tax assessments. However, the objection is also permissible against administrative acts equivalent to the tax ruling, such as basic and liability rulings.

The notification of a tax notice is deemed effected three days after the delivery to the post office. From the fourth day runs the one-month opposition period according to § 355 (1) AO. The objection must be declared in writing or electronically, in no case verbally, to the competent financial authority. Responsible for the objection is the tax office, which also issued the attacked tax assessment.

The remedy obliges the tax office to carry out a full review of the facts, in the course of which there may also be an impoverishment. However, this is not required by law or by administrative regulations. Rather, the objection “opens” the tax case again, so that – as with the first assessment – a deviation from the declared facts can occur.

1.2. The transfer pursuant to § 367 (2) sentence 2 AO

An assault is understood to mean the modification of the attacked decision to the detriment of the objector. It is regulated in § 367 paragraph 2 sentence 2 AO and is possible under comparatively low conditions. The decisive factor is whether the objector is placed worse by the objection decision than he would be if the objection were withdrawn (Klein/Rätke AO § 367 paragraph 11, 12).

In opposition proceedings, the taxable person first requests an amendment to the adjustment notice for certain reasons. He claims, for example, the deduction of further advertising costs or operating expenses. An objection may also be triggered and justified by a loss advance or return that is too low or not at all ascertained or taken into account.

After receiving the appeal, the tax office is obliged to carry out a comprehensive re-examination of the entire case (§ 367 (2) sentence 1 AO). If, in the course of this verification, the competent case handler notices that the taxable person has presented correct facts, but that he himself has also overlooked points, a deterioration may occur.

1.3. Obligation to provide information in case of planned substitution in opposition proceedings

If the tax office wishes to carry out an assignment within the framework of the objection procedure, it must have been informed of the objector in accordance with § 367 (2) sentence 2 half sentence 2 AO. The statement must be made before the assault and concretely justified. The tax office is therefore obliged to draw the attention of the taxpayer to the extent to which he wishes to change the tax assessment to his disadvantage.

The taxpayer then has the option of withdrawing his position or his objection for the planned disposal. If it comes to withdrawal, a change of the attacked decision is only possible within the framework of the regular repeal and amendment standards of the AO.

Unlike in opposition proceedings, a prohibition on reformatio in peius (prohibition of reformatio in peius), which is derived from § 96 FGO, applies before the Finance Court (including the Bundesfinanzhof). It is therefore excluded that a higher tax than that fixed in the contested administrative act will occur.

2. Immediate consequences for the taxable person

If the objector does not withdraw his objection despite reference to the imminent assault, the tax office may issue a decision to this effect. If it only wants to remedy individual points of the objection and otherwise worsen or simply do not meet the request, it comes to the decree