Deadline for filing the income tax return: what to be aware of?

As we have already informed you, the rules modifying the deadlines for filing the income tax return changed on 1 January 2021 following the amendment to the Tax Code. These rules already relate to the taxation period of the calendar year 2020 and reporting period ended 31 December 2020 or later. Meanwhile, the Financial Administration issued the Methodical guideline for the application of the tax return filing deadline. In this article, we are presenting some interesting insights from the current practice and methodology of the financial administration that may have a practical impact on meeting the deadline by taxpayers.

Statutory extension of the tax return deadline

The extension of the tax return deadline by one month (effective for tax returns filed by taxpayers electronically) or 3 months (for tax returns filed by registered tax advisors) applies only if the tax return is filed after the basic three-month term has passed. In practice, we have already dealt with cases when the taxpayer filed their tax return for the taxation period 2020 electronically, though still within the basic term (i.e. until 1 April 2021) and thus the tax return deadline did not automatically extend by one month. This has an effect on the tax payment term as the tax, in such a case, has to be paid until 1 April 2021.

Individual extension of the tax return deadline

For various reasons, the legally extended tax return deadline, i.e. the period of four or six months, may not be sufficient for some taxpayers in order to prepare and file their tax returns. In such cases, due to compelling reasons, the taxpayer can ask the tax office for an individual extension of the tax return deadline. Bear in mind that the extension application has to be filed within the period that is subject to the extension by the tax administrator. In case of the income tax return for the 2020 taxation period, it is now only possible to apply for the extension of the six-month period for filing the tax return, i.e. the deadline for filing the tax return by a tax advisor and the deadline for the tax return of taxpayers subject to statutory audit.

The application for the deadline extension should newly include information if the taxpayer intends to make use of the statutory extension. In other words, it has to be stated if the taxpayer applies for the extension of the statutorily extended period of 4 or 6 months. If the taxpayer fails to include this kind of information, the tax administrator extends only the basic three-month tax return term. In spite of the fact that both the Tax Code and the Methodical Guideline require this piece of information only if the tax return is filed electronically or by a tax advisor, we recommend that even taxpayers subject to statutory audit state this information on the statutory deadline extension. They may thus avoid a potential misunderstanding on the part of the tax administrator who may, with regard to the Methodical Guideline, extend only the basic tax return deadline term with actually no effects on the actual extension.

The application for an individual extension of the tax return deadline has to be justified as the tax administrator assesses the application only on the basis of the reasons stated by the taxpayer. In practice, it happens sometimes that the tax administrator does not consider the stated reasons compelling and does not approve the deadline extension. Moreover, a respective administration fee has to be paid and that is why we recommend paying enough attention to the justification.

Corrections to filed tax returns

If the taxpayer learns that the filed regular tax return is incorrect, it can be substituted by an amended version only if it is done within the deadline for filing the tax return. The amended tax return has to be filed the same way as the regular tax return. If the taxpayer filed the regular tax return electronically within the extended period of 4 months, the amended tax return also has to be filed by the taxpayer electronically. In case of a regular tax return filed by a tax advisor within the extended period of 6 months, the amended tax return also has to be filed by the advisor. It does not have to be the same person, though.

If the amended tax return does not meet the above-mentioned criteria, it cannot be considered an amended tax return according to the Methodical Guideline and the tax administrator will assess it as an ineffective filing. The tax administrator still should use the data from the ineffective tax return when assessing the tax if the status of the proceeding allows for it.

If an error is detected after the tax return has been filed, the correction has to be done by a supplementary tax return. The taxpayer should make sure that the supplementary tax return now meets the new rules and is thus admissible. The reason for this is the fact that the financial administration uses the data from the inadmissible supplementary tax return for a higher tax and at the same time uses it as a basis for a penalty.

The whole wording of the Methodical guideline for the application of the tax return filing deadline is available on the webpage of the Financial Administration of the Czech Republic.

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