Enforcement Penalties from the Tax Office: Consequences and Advice

The aim of an enforcement penalty is not that those affected should simply pay it. The tax office is seeking, above all, to obtain the submission of the outstanding tax return.

An enforcement penalty becomes an option when you, as a taxpayer, allow the filing deadline for a tax return to pass. This applies to all tax returns, including the income tax return and the VAT return. The legal basis is found in the Fiscal Code (Abgabenordnung) from § 329 onwards.

The precise point at which the authority threatens an enforcement penalty varies depending on the responsible tax office and the individual case. Some offices send a warning notice shortly after the filing deadline expires; others wait several months. This depends, among other things, on the workload of the local tax authority.

In the first step, the tax office issues a threat of an enforcement penalty and sets a deadline of at least two weeks. During this period you may submit the outstanding tax return without having to pay the enforcement penalty.

If you allow the stated deadline to pass, the enforcement penalty will be formally imposed. It may amount to up to 25,000 euros. The exact amount is at the [discretion of the tax office](https://www.steuertipps.de/lexikon/e/ermessen). The officials take several criteria into account:

• The likely amount of the tax assessment
• The taxpayer's financial capacity
• The persistence of the failure to submit the tax return

Once a taxpayer submits the tax return, the grounds for the enforcement penalty fall away. Even a penalty that has already been formally imposed no longer needs to be paid at that point. However, if you paid the enforcement penalty before submitting the tax return, no refund will be made.

If you still fail to submit a tax return despite the enforcement penalty, the tax office may impose further enforcement penalties of up to 25,000 euros each. The authority may enforce each individual penalty by means of compulsory execution. A typical measure is the freezing and attachment of a bank account. The tax office may also apply to the local court for substitutive coercive detention (Ersatzzwangshaft).

If your tax office threatens an enforcement penalty, you should immediately complete and submit your tax return. This allows you to avoid this financial nuisance and protects you from further measures such as the enforcement of the penalty itself.

In exceptional cases, it may be worth lodging an objection against the threat or the imposition of an enforcement penalty. In most cases, however, the prospects of success are slim: it is far better to submit your outstanding tax return as quickly as possible. This also prevents additional costs such as the late-filing surcharge, which tax offices impose independently of any enforcement penalty.

Even better: entrust all your tax returns to an established tax adviser! Your Guhr Steuerberatung submits your tax returns on time, so you need never concern yourself with enforcement penalties and the tax office.

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