How to respond to inaction by tax administrator?

Proceedings before the tax authorities often take longer than taxpayers would like. However, like all proceedings before public administration authorities, these proceedings are subject to certain rules. In relation to tax proceedings, the Ministry of Finance has published a guideline on setting time limits for tax administration. In this context, the Supreme Administrative Court (SAC) has issued a judgment dealing with what can be considered a reasonable time limit for decision-making by the Appellate Financial Directorate (AFD).

In its recent judgment, the SAC addressed the Appellate Financial Directorate's inaction in relation to the six-month time limit for issuing a decision on the appeal in the AFD’s cassation complaint against the regional court's judgment. This time limit starts to run at the moment the file is returned to the AFD, does not run for the duration of the completion of supporting documents, and upon request its duration may at a maximum be doubled by the superior authority.

According to the SAC, if the AFD has not taken any action within the time limit (six months) set for reaching a decision, it is considered to be in a state of permanent inactivity that cannot be remedied even if it again starts to act. If the AFD has been inactive in this way and has not issued a decision on the appeal, the court must, according to the SAC, always uphold the inactivity action. If the regional court upholds the inactivity action, it will itself set a new time limit within which the AFD must make a decision.

In practice, it is quite difficult to know whether the tax administrator is taking any specific actions in a case. However, every action must be recorded in the administrative file. If nothing happens for a long time during the tax administrator's inspection procedures, the best option is to consult the file. If the taxpayer feels that the time limits set by the Ministry of Finance have already expired, we suggest submitting a complaint for inaction under the Tax Procedure Code. The tax administrator should then inform the taxpayer about the status of the proceedings. If the tax administrator's actions are not satisfactory even after the complaint, the taxpayer may bring an action for failure to act / inactivity under the Code of Administrative Justice.

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