An administrative appeal of the Directorate of Internal Revenue‘ decision.

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Reykjavík January 4, 2016
Reference: FJR15100043/16.2.3

Subject: An administrative appeal of the Directorate of Internal Revenue‘ decision.

A reference is made to the appellant's e-mail dated 13 October 2015 wherein the appellant asks for the Ministry's review of the Directorate of Internal Revenues' decision not to waiver penalties on the appellant's taxes.

Facts:
The appellant moved to Iceland in the year 2009 and was registered in the country from March the same year. That registration remained unchanged until 30 November 2011, when the appellant's change of address was registered in France from the date of 1 August 2010 on the grounds of the Directorate of Internal Revenues' findings that the appellant's residence for tax purposes had changed on 1 August 2010. The appellant informs in his e-mail to the Ministry that he indeed left the country in 2010 without noticing the Registry of Iceland and claims that he did not realize he needed to do so as taxes were debited from his salary.

The tax office changed the appellant's assessment for the year 2010 in order to calculate taxes based on income annualized rather than income till departure. The appellant therefore received a refund of the tax difference. The appellant claims he did not receive any information from his bank about this transaction on his account nor did he ever check his account. The appellant's view is that the tax authorities made a mistake in their first new tax re-assessment. Subsequently, the tax authority realized it had made a mistake and recalculated the tax assessment, which lead to the appellant's debt to the tax authorities.

The appellant claims that not a single step was taken in order to contact him. The claim remained unpaid for five years until he came to Iceland again and visited his bank, at which time he settled the claim.

In light of the circumstances, i.e. that the tax authorities made the mistake to reimburse him too much without undergoing any real analysis of the situation, the appellant asks the Ministry to consider his request. He also asks to be advised whether he can take any further steps in order to correct his matters.

Conclusion:
If tax is not paid within one month from due date, late payment penalty of the due amount are added to tax claims. Penalty interests are prescribed by law and no exceptions are allowed, according to the paragraph 1 of Article 114 of the Income Tax Act no. 90/2003.

According to Article 96, paragraph 4, of the Income Tax Act, the Local Tax Commissioner is to notify the taxpayer, in writing, if changes are made to a tax return or taxes after assessment and taxes are re-assessed, and inform the taxpayer of the intended changes and of the reasoning behind such changes. The Local Tax Commissioner is to give the taxable entity at least a 15 day time limit, from posting the notice of the intended changes, to respond in writing about the matter at hand and, if needed, supply additional data, before final ruling. According to paragraph 5 of said article, the Local Tax Commissioner shall, as a general rule, give a reasoned ruling about the reassessment of taxes within two months and send the ruling via registered mail to the taxpayer.

In accordance to Article 96, paragraph 4, of the Income Tax Act, it is informed that the Director of Internal Revenue sent, firstly, a letter on 22 September 2011, and secondly, a final ruling on 1 November 2011, to the appellant's registered domicile in Iceland, in [X], Kopavogur […].

The appellant states that he did not notify the Registry of Iceland of his change of address nor did he notify the tax authorities of his e-mail address as he did not realize he needed to do so. It can be inferred from his appeal that he did not have much knowledge about his duties according to Icelandic tax law. However, it has been established by the Althing Ombudsman (case no. 5068/2007) that it is a taxpayer's duty to show a certain initiative in finding out whether he is liable to pay any tax after assessment if he wishes to escape late payment penalty of tax claims.

It is therefore the result of the Ministry that the appellant was responsible to pay the late payment penalty of his tax claims.

Ruling:
The decision of the Directorate of Internal Revenues not to waiver penalties on the appellant's taxes, is confirmed.

On behalf of the Minister