Deliberate breach: The behavior of the taxpayer, during a tax audit, does not in itself justify the penalty – EconomyMorning

The Council of State has just recalled that the behavior of a taxpayer, during an audit, is not in itself sufficient to justify the application of the penalty for willful breach.

When a taxpayer deliberately fails to meet his reporting obligations or to pay tax, he incurs an increase of 40% for willful failure – the term has replaced that of “bad faith” – the rate of which is 40%. This increase is added to the late payment interest of 2.4% per year and is calculated on the rights charged to the taxpayer.

In the case submitted for the assessment of the Council of State, a taxpayer had been the subject of an examination of his personal tax situation for the years 2009 and 2010. At the end of the control operations, the tax administration had reintegrated in its taxable income, on the one hand, undeclared property income for an amount of 13,974 euros, and, on the other hand, sums regarded as income of undetermined origin for an amount of 117,449 euros, and had consequently subjected him to additional contributions of income tax and social contributions, with the 40% penalty for willful misconduct.

The taxpayer not having obtained satisfaction before the Administrative Court of Lille, then before the Administrative Court of Appeal of Douai, he appealed in cassation to the Council of State.

In a judgment n ° 432960 of February 11, 2021, this one recalls that in the event of contestation of the tax penalties applied to a taxpayer, the proof of the deliberate breach rests with the administration. To establish this willful failure, the administration must provide proof, on the one hand, of the insufficiency, inaccuracy or incompleteness of the declarations and, on the other hand, of the intention of the interested party to evade the tax.

To establish the intentional nature of the taxpayer’s failure to comply with his reporting obligation, the administration must place itself at the time of declaration including an indication of the elements to be retained for the assessment or settlement of the tax.

On the other hand, it cannot be based exclusively on the attitude of the taxpayer during the control operations to establish the willful breach.

However, in the present case, the Administrative Court of Appeal of Douai had ruled that the tax administration, arguing the absence of any convincing explanation on the origin of the sums in question and the absence of collaboration of the taxpayer during the control operations, provided the proof which is incumbent on it of the deliberate nature of the failure to declare alleged against it with regard to income of undetermined origin.

The Council of State therefore annulled the decision of the Administrative Court of Appeal of Douai regarding the penalty for willful breach.

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