Costs incurred amending tax returns can be offset against estate tax

MTR Rechtsanwälte | View firm profile

Heirs are obligated to amend or subsequently file the testator’s incomplete or missing tax returns.

A testator who conceals income from the tax authorities may be setting the heirs up for problems. While the latter are not responsible for the testator’s tax evasion, we at GRP Rainer Rechtsanwälte note that they are obliged to amend the tax returns.

To this end, it may be advisable to consult expert advisers to ensure no mistakes are made. The costs incurred in obtaining tax advice can be offset against estate tax according to a ruling of the Finanzgericht Baden-Württemberg from May 15, 2019 (Az. 7 K 2712/18).

The plaintiff, as the sole heir, had amended the testator’s tax returns for several years. These amendments concerned supplementary declarations of investment income generated in Switzerland. She applied to have the costs incurred as a result of this offset in her estate tax return.

The Finanzgericht ruled in her favor. It held that costs incurred in obtaining tax advice are to be accounted for as estate liabilities. The Court went on to state that the heir had been obligated to submit supplementary tax returns and in doing so discharged an obligation owed by the testator. The respective tax office has lodged an appeal against the decision.

Lawyers experienced in tax law can offer advice.

More from MTR Rechtsanwälte