Forfeiture of the withholding tax refund claim due to eventual intent non-declaration through failure to file the tax return

Facts

The appellant [A.] did not file a 2015 tax return despite a reminder from the Tax Office of the City of Zurich. On 16 March 2018 the Cantonal Tax Office of Zurich assessed her at her own discretion with taxable income of CHF 210'000.-- each (direct federal tax as well as cantonal and municipal taxes) and taxable wealth of CHF 10'120'000.--. It set the withholding tax refund claim (maturity year 2015) at CHF 0.--.

The appellant lodged an objection without any reasons, evidence or supporting documents, whereupon the Tax Office declined to entertain it. The Zurich Tax Appeals Court dismissed the appeal on 14 January 2019 with respect to income and wealth tax, but omitted to decide on the withholding tax. The Federal Supreme Court dismissed a related appeal in judgment 2C_195/2019 of 20 August 2019, insofar as it was admissible. The Tax Appeals Court decided on 16 December 2019 and dismissed the appeal against the objection decision (1 VS.2019.3).

By public law appeal of 30 January 2020, the appellant requested that the decision be set aside and that the withholding tax refund of CHF 75'828.25 for 2015 be granted, or in the alternative that the matter be remitted to the Tax Appeals Court. The Cantonal Tax Office and the Federal Tax Administration requested dismissal insofar as the appeal is admissible. The Tax Appeals Court waived a response.

Subject matter of the dispute: Whether the claim to a withholding tax refund under Art. 23 WTA is forfeited because the appellant intentionally (with eventual intent) failed to declare the income and assets.

Considerations

Admissibility: The public law appeal against a final cantonal decision is admissible under Art. 82 lit. a, Art. 86 para. 1 lit. d and para. 2, Art. 89 para. 1 and Art. 90 FSCA in conjunction with Art. 56 WTA, and was filed in due form and time (Art. 42 para. 1, Art. 46 para. 1 lit. c, Art. 100 para. 1 FSCA). Exceptionally, challenging the replaced assessment decision and the objection decision is also admissible, since their nullity is asserted (devolutive effect, BGE 134 II 142 E. 1.4; judgment 2C_679/2016 of 11 July 2017 E. 3.1). The Federal Supreme Court applies the law of its own motion (Art. 106 para. 1 FSCA) and is bound by the findings of fact unless they are manifestly incorrect (Art. 105 FSCA).

Legal framework: Under Art. 23 para. 1 WTA, a person who fails to declare income or assets subject to withholding tax contrary to statutory requirement forfeits the refund claim. Under Art. 23 para. 2 WTA (in the version in force since 1 January 2019, applicable to claims since 1 January 2014 under Art. 70d WTA), forfeiture does not occur in the case of mere negligent non-declaration that is remedied in the ongoing assessment, revision or supplementary tax procedure (lit. a) or that is added by the authority on its own findings (lit. b). Eventual intent suffices for intentional non-declaration (Art. 12 para. 2, Art. 104, Art. 333 para. 1 SCC; BGE 131 IV 1 E. 2.2). The distinction from conscious negligence follows BGE 133 IV 9 E. 4.1 and BGE 133 IV 1. Proof of intent is deemed furnished where knowledge of the incorrectness is established with sufficient certainty; the intent is then presumed, and this presumption can hardly be rebutted (BGE 114 Ib 27 E. 3a).

Arguments on forfeiture under Art. 23 para. 1 WTA: The appellant argued that her appeal, with a complete tax return and securities schedule, precludes forfeiture. The Federal Supreme Court rejects this: the wording and purpose of Art. 23 para. 1 WTA also cover subsequent submission of documents in appeal proceedings.

Assessment of evidence and intent: In its assessment of the evidence, the lower court found at least eventual intent to non-declaration. The appellant failed to…