No late payment interest in cases of penalties for willful default, even if such penalties are waived
An individual was subject to a tax reassessment regarding income tax. He received a reassessment proposal whichadministration their intention to impose penalties for willful noncompliance. However, these penalties were waived during the individual’s challenge to the validity of the tax assessments.
Since the taxpayer had not settled the tax assessment,administration enforcement proceedings (formal notices, seizures from third-party holders, etc.) to obtain payment of the outstanding amounts, plus enforcement costs and late-payment interest pursuant to Article L.209 of the General Tax Code.
The individual challenged these enforcement actions in court. In particular, he argued that the tax authorities had no right to demand payment of late-payment interest sinceadministration already applied the surcharges.
In a ruling dated April 3, the Administrative Court of Appeal of Douai reiterated that default interest under Article L.209 of the Public Finance Act is not due whenadministration surcharges for willful noncompliance.
It will further hold that the reduction of the surcharge mentioned in the reassessment proposal no effect on the calculation of late payment interest under Article 1727 of the General Tax Code and that this cannot affect the non-application of default interest under Article L.209 of the Public Finance Act.
The Court thus exempts the taxpayer from paying interest.