Zoff with the tax office can start like this: A young woman, employee and mother, made a mistake on the 2017 tax return. Although she stated her parental allowance, she forgot to declare the sickness allowance that she received before the birth. In addition, she no longer has to include the fee for a presentation in her tax return.
Not so bad because no tax officer notices such ugliness anyway? Are you kidding me? Are you serious when you say that. The case is constructed, the young woman’s mistakes never happened – but if they did, they would be very likely to provoke inquiries from the tax office. Tax offices immediately notice forgotten fees, sick pay payments or investment income. The reason: Germans are being digitally screened more and more intensively by the tax authorities. A network of contributors provides the tax offices with a large number of tax-relevant data without the involvement of the taxpayer. Employers provide digital information about salaries and wages, parental allowance offices report payments, the German pension insurance forwards information on statutory pensions or transitional allowances, employment agencies and health insurances report wage replacement benefits and insurance contributions, banks and fund companies provide information on investment income left tax-free – the latter also beyond national borders.
“Anyone who thinks they can still hide something quickly gets into trouble,” says the Berlin tax advisor Wolfgang Wawro, spokesman for the Berlin-Brandenburg Association of Tax Advisors. “With the new technology we are getting closer and closer to a tax control state.”
But the increasingly dense data network is not free from errors. This can become a problem if the tax authorities rely too much on the automatisms – or if citizens place too much trust in the system. Because then, in the worst case, they pay on it.
Dense control network
The key for the control network is the tax identification number allocated since mid-2008. With it, the state has a test instrument to check the tax compliance of its citizens and to combat abuse of services at the social authorities. The Federal Central Tax Office in Bonn administers the eleven-digit code that unequivocally identifies every resident of Germany – from infants to senior citizens – as a taxpayer. The personal identifier is valid for life, is only deleted 20 years after death and enables the authorities to have comprehensive digital control of sources of income and financial transactions.
Concealers have almost no chance: Regardless of whether you are applying for a pension or sickness benefit or placing a new exemption order at the bank – nothing works without specifying the ID number. Domestic banks need the number to levy church tax on interest and dividend income subject to withholding tax. Those with private health insurance must provide their insurer with their identification number so that the health insurance contributions for basic coverage can be electronically transmitted to the tax authorities. Otherwise, the tax office only considers contributions of up to 1900 euros per year.
In addition to the tax authorities, other authorities dealing with income tax law have access to tax-relevant data – via account inquiries from domestic banks. This makes it easier for BAföG offices, social and labor offices and bailiffs to track down hidden assets of beneficiaries.