Supplementary Tax Procedure in Case of Incomplete Assessment: Requirements and Novelty of Facts

Facts

The married couple [A.C.] and [B.C.] moved their domicile from [U.] (Canton of St. Gallen) to [V.] (Canton of Appenzell Ausserrhoden) in the summer of 2006. [A.C.] partially worked as a self-employed lawyer in the city of [W.] . On 28 September 2007, they submitted their tax return for the 2006 tax period in the Canton of Appenzell Ausserrhoden. In the Canton of St. Gallen, they did not submit a tax return for the 2006 tax period or for the following assessment periods.

In the context of the assessment for the 2009 tax period, the Canton of Appenzell Ausserrhoden contacted the Cantonal Tax Office of St. Gallen on 28 December 2011. This office became aware of the omitted assessments regarding the tax periods 2006, 2007, and 2008 and assessed the cantonal and communal taxes for the income and assets from the husband's self-employed lawyer activities for the 2006 tax period with a ruling dated 29 December 2011.

The appeal against this ruling was granted by the Cantonal Tax Office of St. Gallen due to the expiration of the assessment period with an appeal decision dated 24 February 2012. On 25 February 2014, the Cantonal Tax Office of St. Gallen initiated a supplementary tax procedure for the 2006 tax period and assessed the married couple [C.] with the supplementary tax ruling of 7 November 2014 and the final invoice of 6 November 2014 for the cantonal and communal taxes.

Considerations

The Federal Court had to examine whether the requirements for conducting an ordinary supplementary tax procedure pursuant to Art. 53 para. 1 DTHA were met. The lower court had decided that the 2006 tax assessment was new, as it had only been received by the Cantonal Tax Office of St. Gallen after the expiration of the assessment period.

However, the Federal Court came to the conclusion that the tax factors of the 2006 tax assessment were known to the assessing tax authority at the latest on 28 December 2011. The assessment of the disputed tax factors had therefore not been unjustly omitted. The lower court had also incorrectly evaluated…