Ask a lawyer on the topic of Tax law

Criminal tax investigation procedure

November 23, 2009 | 35,00 EUR | answered by Andreas Scholz

An investigation has been initiated against me according to § 397 AO on suspicion of tax evasion of income tax and solidarity surcharge in the years 2004-2008. (§§ 369, 370 AO)

The tax office also requests profit calculations for the years 2002-2008.

The situation:

Over the years, I have sold used clothing, board games, and various knick-knacks on Ebay. I purchased these items at flea markets. In 2007, I also registered a business and had a tax advisor prepare my tax returns for 2007 and 2008 (taxes were also paid on income from self-employment in those two years). In the years prior, I did not do this, as I prepared my tax returns myself and did not declare the income from the Ebay business.

In hindsight, I am unable to create profit calculations for the years 2002-2006 as I do not have any documents from those years. Perhaps I can create a somewhat decent profit calculation from the old bank statements.

I can only roughly estimate the profit for the years so far - I believe it is between 5000 euros and 8000 euros per year.

I was employed during this time with an income of approximately 24,000 euros per year and ran the Ebay business "on the side."

Since I cannot provide an exact profit calculation, I assume that the profit will be estimated - what should I expect?

I am currently a student, working as an independent sales agent under § 84 HGB - so far without income - my wife is still on maternity leave and my daughter is about 2.5 years old.

Why does the tax office also want documents from 2002 and 2003 if the accusation of tax evasion only pertains to the years 2004-2008? What should I fear? Worst case scenario?

Thank you

Andreas Scholz

Dear questioner,

In your case, the reckless tax evasion is definitely a possibility, which would result in a fine. Whether or not a conviction for tax evasion could actually occur, resulting in a fine or imprisonment (which would probably not be imposed on you), would depend on whether intent could be proven.

If you are unable to provide the exact taxable profit for the required period, an estimation will be made, taking into account all circumstances of the case, according to § 162 AO. The more plausible information you can provide, the more objective the assessment can be.

The fact that the tax office is also requesting documents from the year 2002 could have several reasons. It may be to determine whether there have been any notifications under § 138 AO for that period. Another reason may be to understand how your income was structured from 2002 to 2008 (income from self-employment and employment).

The tax evasion proceedings may be terminated due to insignificance. Perhaps you should have the documents you intend to submit checked by a professional beforehand for this reason.

I hope this information has been helpful. If you have any further questions, please feel free to ask.

Best regards,
Andreas Scholz, Attorney