Tax return errors: legal consequences and tips on how to avoid them

If you have made mistakes on your tax return, the most important factor in determining whether these mistakes are punishable is who suffers a disadvantage as a result of the mistake. If these errors are to your disadvantage, for example if you have understated or forgotten a special expense, no penalty is to be expected. Caution is required if the error is to the detriment of the state, i.e. if you deprive it of tax revenue.

You could be liable to prosecution for tax evasion for both deliberate misstatements and input errors. This can be the case if you inadvertently enter one 0 too many for a special expense, for example if you enter 10,000 instead of 1,000 euros for work equipment in your tax return. Honesty is not only the top priority when filing a tax return, it is also mandatory for you, as you confirm the accuracy of your details with your signature when submitting your tax return.

In the case of deliberate deception of the tax office, for example by concealing income or deliberately not declaring it, i.e. where it is clear that it is not a case of an input error, the last resort for the taxpayer is often to make a voluntary declaration of tax evasion. However, the law provides for a hardship provision for income of less than 410 euros. If the amount is higher, however, the legal situation is clear.

If you are under investigation for tax fraud or tax evasion, you should definitely consult an experienced criminal tax lawyer. Under no circumstances should you make any statements on the matter until you have discussed this with your lawyer.

Mistakes can happen when you enter amounts for your tax return. The tax office is also aware of this. It is therefore possible to report these to them and correct them. Here too, a distinction must be made between disadvantages for the state and disadvantages for you. However, there are common procedures for both cases.

In both cases, before you take any steps to correct them, you should check exactly which information in your tax return was incomplete or incorrect. Once you have identified the exact error, you should contact the tax office immediately. The responsible officer will then reply to you about the procedure and set a deadline by which the correction must be made. The assessment period within which the tax office may reclaim money is regulated in Section 169 of the Tax Ordinance and also applies in the event that you are able to report an error. This also applies to previous tax returns. In the case of minor discrepancies and small amounts, this applies for four years. In the case of tax evasion, i.e. if the only option is to self-report, the period is extended to up to ten years.

If the error in the tax return was made to your detriment, you have the right to correct it. In practice, this is often the case if receipts or invoices relating to your work or your health reappear or arrive late. You can then report these errors and have them corrected within the four-year period. Exceptions apply if these errors are the result of gross negligence on your part. This may be the case, for example, if you do not have your bookkeeping under control. In such cases, you should definitely seek professional help!

The procedure for an incorrect tax return

There are four specific ways in which you can react to an incorrect tax return.

If you have not yet received your tax assessment notice from the tax office after submitting your tax return, it is easy to correct it. In this case, you should contact your tax office clerk directly by phone or email. They can then stop processing your tax return and postpone it until the correction has been received. You will be given a deadline by the clerk within which you can correct the error informally or, better still, in the form of a subsequently submitted revised tax return.

If you only become aware of the error when you receive the tax assessment notice, you can lodge an objection to the tax assessment notice within a period of four weeks. As part of this appeal, you must state your reasons and should submit a correction to your tax return at the same time. The tax office will then usually recalculate the entire tax assessment taking your correction into account.

In practice, it is also advisable to submit an application for a simple amendment to the tax assessment notice in accordance with Section 172 of the German Fiscal Code. In contrast to an objection to the tax assessment, the tax office does not re-examine and completely recalculate the entire tax assessment, but only the corrected point. In practice, this often means that you cannot worsen your situation, only improve it. This procedure is particularly recommended for late receipts and invoices that you want to claim for tax purposes.

As a last resort, you can apply to have your tax return withdrawn. You should resort to this if the tax office demands an additional tax payment contrary to your own calculations. You can withdraw your tax return with a simple application. However, this option is only available for voluntary tax returns! Citizens who are obliged to file a tax return are therefore excluded from this. The tax office can also impose an obligation to submit a tax return, e.g. if you have income that the tax office was not aware of, it is not possible to withdraw your tax return.

To prevent mistakes from happening in the first place and avoid the above-mentioned procedure, we have four practical tips for you on how you can avoid the most common mistakes when filing your tax return and avoid criminal liability:

3.1 Always enter your data correctly and carefully!

The most important tip we can give you - especially in times of electronic tax returns - is that you should always enter your data carefully and conscientiously. A lack of attention and care when entering data often results in careless mistakes. You should therefore always check whether you have entered your income, special expenses and other relevant data correctly before submitting your tax return. Avoid rounding up in your favor!

In case of doubt, the tax office can request your receipts and check whether your information was correct.

3.2 List your full income!

To avoid prosecution by the tax office and criminal liability, you should always list your full income on your tax return. In particular, make sure you carefully declare any additional income from a second job, commercial activity and capital income from shares, bonds, funds, etc.

3.3 Domestic help must be registered!

If you employ a gardener or cleaner, for example, as a domestic help on a 450 euro basis, you can deduct this money from your taxes. However, it is important that you register this worker with the mini-job center beforehand. If you have not registered these workers, you are guilty of illegal employment. If you still want to deduct such a worker for tax purposes, you will not only face legal proceedings for undeclared work, but also additional payments to the tax office.

3.4 Enter the correct number of kilometers for the journey to work, do not round up!

One of the most common mistakes when preparing a tax return is rounding up the number of kilometers traveled to the place of work. Make sure that the information on commuter allowances or travel expenses is correct (not rounded up). The tax office is used to these popular tricks, so they are increasingly getting to the bottom of any anomalies. Such false declarations are relevant under criminal law and can also result in high fines!