Longer processing time at the tax office is no reason for a waiver of interest on arrears

It is often astonishing how long it takes a tax office to issue an amended tax assessment, which then also includes – sometimes considerable – interest on back payments. Now the Federal Fiscal Court (BFH) has decided that an extended processing time of the tax office does not justify a remission of interest on back payments.

The BFH clarifies that a delayed processing of the tax case by the tax office is not in itself suitable to justify a lower interest rate.

The legislator assumes an average processing time of 15 months. If this period is not exceeded, a lower interest rate cannot be set for reasons of equity.

How can high interest on back payments due to delayed processing at the tax office be countered?

Taxpayers have the option of circumventing or minimizing interest determination by making a voluntary payment on the expected back tax demand. This voluntary overpayment triggers so-called fictitious refund interest, which leads to offsetting against the interest on arrears.