A tax assessment is regularly issued provisionally or subject to verification. But what does that actually mean, by what are the two instruments of financial management different and what risks can result for the taxpayer? All these questions are addressed in this contribution.

The tax can be determined in accordance with § 164 AO subject to verification. The reservation of verification is an ancillary provision to the adjustment notice as an administrative act. It leads to a further possibility of correction and thus to a suspension of material strength. The tax office does not need to finally examine the tax case at the time of tax determination. Thus, the reservation of the review, even before the factual and legal situation is finally clarified, makes it possible to determine the tax. Thus, the setting of a reservation is similar to a tax declaration. The reservation of verification always covers the entire decision.

The aim of the reservation of the review is to accelerate the tax assessment in the mass tax procedure. This makes it possible to set the tax for the first time more quickly and to make it possible for advance payments to be due earlier. Conversely, there are also faster refunds for the taxpayer, which results in the risk that he has to refund refunds.

A tax assessment can also be provisionally issued pursuant to § 164 AO. The tax may be provisionally fixed only if it is uncertain whether the conditions for the tax to be established have occurred. In doing so, however, the financial authority must have made appropriate educational efforts, under which uncertainties still remain, which currently cannot be eliminated or can only be eliminated with disproportionate effort. The issuing of a provisional adjustment notice does not, therefore, exempt the tax authority from its duty of investigation, unlike the reservation to review.

The reservation of verification does not require any justification. However, it must be clearly identifiable to the taxable person from the adjustment notice.

The tax situation may not yet be finally checked in order to set the tax subject to verification. It is therefore inadmissible to regulate a fact that has already been finally examined, subject to verification, in order to keep the tax event open and to be able to correct it more easily. An examination is completed if there is no longer a need for an examination or if an examination has taken place so intensively that a further examination seems unlikely. Examination in this sense may include any kind of factual investigation or legal review. External testing is therefore not absolutely necessary.

In administrative practice, for example, the tax is set conditionally if the taxpayer is subject to regular external audit or if it is intended to carry out an external audit. Finally, the external inspector checks so that duplication of work is avoided.

The reservation of the review is finally automatically waived upon expiry of the regular determination period of § 169 paragraph 2 sentence 1 AO.

The amended tax assessment can also be made subject to verification. However, the amending decision cannot be aggravated by initial reservation. However, the accidentally omitted reservation notice in accordance with § 129 AO can be corrected.

As long as the tax case is not finally examined, the tax administration can set the tax subject to verification. Therefore, the Authority has discretion. In fact, § 164 AO does not require the tax authority to actually carry out a later audit. Incorrect discretion is the reservation of the review, however, if the officekeeper assumes at the time of determination, no final determination later. It is necessary, therefore, that it seriously consider further examination. However, in the absence of a duty to state reasons, errors of judgment are hardly demonstrable. However, it is also erroneous if an ad hoc provisional note, which for this reason interferes less with the rights of the taxable person, should have been chosen.

If the financial authority subsequently recognizes that it will no longer carry out a final audit, it has to rescind the reservation of the audit. The annulment shall then be tantamount to a definitive determination.

The taxpayer can request the cancellation or amendment of the tax assessment at any time (§ 164 paragraph 2 sentence 2 AO). However, the tax authority may postpone the decision on the application until the final examination of the case.

The tax notice issued subject to verification already has all the effects of a definitively issued tax notice. It is therefore the basis for the collection and enforcement of the tax. Moreover, tax evasion can be committed by the mere fact that the tax has not been fully established subject to verification. The act is then also already completed and not just tried. However, the reservation note in the subject matter of provisional fixing shall have no effect on the expiry of the period for fixing.

Unlike the reservation of the review, the issuing of a provisional tax assessment is not exempt from the obligation to investigate. Therefore, the adjustment notice can only be issued provisionally if the conditions for the creation of the tax are uncertain. This includes, for example, uncertainty about facts, such as the value of an asset or the intention to generate income.

However, if the tax bases are permanently uncertain, they are to be estimated or the rules of the objective burden of proof apply. Accordingly, the tax office bears the objective burden of proof for tax-generating and tax-increasing facts. The taxpayer, on the other hand, bears the burden of proof of tax-relieving or tax-reducing facts.

The Preliminary Notice is an ancillary provision in its own right and therefore cannot be challenged in isolation. However, the tax authority may cancel an unlawful provisional statement while retaining the rest of the notice. The Preliminary Statement is at the discretion of the tax authority and does not have to cover the entire part of the adjustment notice.