Action for failure to act in tax law as a means of acceleration

If you as a taxpayer miss a deadline set by the tax authorities or the legislator, the tax office usually reacts quite severely. Late payment penalties are imposed, fines are threatened, statutory late payment penalties are levied or the tax bases are estimated. But what if the tax office takes its time to process an objection? Then you have the option of exerting pressure on the tax authorities by filing an action for failure to act under tax law.

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Action for failure to act in tax law – what is that?

The action for failure to act is a subtype of an action for issue of an administrative act, which is relevant in three codes of procedure in public law: in administrative law, in social law and in tax law. The use of the action for failure to act is hastening the proceedings. The action is supposed to force the tax office to conclude the matter and to issue a decision within an appropriate timeframe and until a set date.

For its admissibility in the tax court, it’s necessary that the action for failure to act is filed with the appropriate court, that all deadlines are met, and that the delay is without reason for the tax office. An example for a delay without reason is that the office is short-staffed. On the other hand, an action is inadmissible if the delay is with reason, for example because documents are missing and a conclusion is not possible yet.

Action for failure to act in tax law – how does it work?

Generally you should only consider an action for failure to act in tax law when every prior attempt at contacting the tax authorities has failed. It causes you no disadvantages to first call the tax office after six to eight weeks to ask about the current state of affairs. If that doesn’t lead to the desired result, a letter to the head official or department head is a possible second step. If those efforts are also without success and your documents remain unprocessed without a reason being given, you can file an action for failure to act.

To file the action for failure to act, you need to hand in all relevant documents and proof completely and with date at the appropriate court. These documents largely decide whether the action is admitted or rejected as inadmissible. For that reason, it is useful to check whether all documents are complete beforehand. If the action is admissible, it is placed before a judge. Following that, a new deadline is set for the tax office to process your tax documents. This decision in the form of a ruling is delivered to both parties by mail.

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Why it is sensible to engage a lawyer for an action for failure to act

It requires careful consideration whether an action for failure to act is an effective means to compel the tax authorities to act. To not fail due to inadmissibility, all documents have to be examined on whether they’re complete and all communication attempts with the tax office need to have been provably unsuccessful. This is all the more important because proceedings before the tax court are single-tier, so an appeal upon losing isn’t possible. Even though there is no statutory requirement for representation in the tax court, for the aforementioned reasons it is recommended to have a consultation with and to be represented in and out of court by a lawyer of your trust.

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Lawyer Christian Janssen from Berlin

Law school: at Hamburg University
Clerkship: at Kassel District Court
Licensed as lawyer via the bar association Berlin since 2015

Frequently asked questions about the action for failure to act in tax law

When is an action for failure to act recommended?

If the tax office takes longer than half a year without any intermediate replies to process your tax filings, you can consider an action for failure to act. For this time limit there is no set deadline however. Instead, a vague phrasing states that an action for failure to act is admissible in tax law when the tax office doesn’t issue a decision within a reasonable time and doesn’t give a sufficient reason for this to the taxpayer. Therefore, filing an action should be the last step when all other efforts have failed.

Who pays for an action for failure to act in tax law?

The costs for an action for failure to act in tax law are paid by the respondent, meaning the tax office, on the condition that the action is admissible and well founded. If the action is dismissed as inadmissible or without merit, the claimant has to pay the costs. As the authorities regularly represent themselves before court, there are generally no attorney fees on the side of the respondent, which the taxpayer as claimant would otherwise also have to pay in case of a loss. The same applies when the claimant withdraws their action before a decision is made by the tax court. In this case the court costs are however halved: half of the costs remain even when withdrawing the action before a decision according to § 136 FGO alongside § 3 Abs. 2 GKG and Nr. 6111 KV.

How long does a decision on the action for failure to act take in tax law?

Most actions in the tax court are decided on within one day. Usually, the hearing for an action for failure to act takes only one or two hours. That actions in the tax court are decided on quickly is desired by the legislative authority. This way the matter of the proceeding is worked on under concentration. Only some larger proceedings require more time, leading to follow-up dates that take several hearings and sometimes even a few years.

When should you avoid an action for failure to act in tax law?

Only once all other means have been exhausted and all attempts at contact with the tax office have failed should you consider an action for failure to act. If chances for a positive decision are rather low, you should avoid an action for failure to act. You should also consider that filing an action in the tax court puts pressure onto the people responsible, which can lead to a negative attitude that can affect your cooperation with the tax office long-term. Therefore, you should carefully consider whether filing an action would be helpful.

Can I file an appeal against a decision of the tax court on an action for failure to act in tax law?

Proceedings in the tax court are single-tier as a matter of principle. That means that there is only one level of trial jurisdiction. This makes it all the more important to act carefully with an action for failure to act and to present the facts of the case completely and conclusively. As a special court, the tax court is exclusively single-tier and responsible for tax law disputes in first and last instance. In the case of a loss, there is no option to appeal the decision.

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