Tax Reassessment Notice: What to Do when Facing a Tax Adjustment?

Understand, Respond to, and Effectively Challenge a Tax Adjustment Notice

Receiving a notice of tax adjustment from the French tax authorities can cause concern and confusion. This document marks the beginning of a tax reassessment procedure, whether it concerns an audit of your income tax, VAT, or your wealth or real estate taxation.
For individuals and businesses alike, it is essential to know your rights, the response deadlines, and the available remedies.
This article, written by a tax lawyer in Toulouse, guides you step-by-step to understand the procedure and respond effectively.

What is a Notice of Tax Adjustment?

A notice of tax adjustment (or “tax reassessment proposal”) is an official document by which the tax authorities notify a taxpayer of the proposed changes to their declarations.
It is issued following a tax audit, an accounting verification, or a personal tax situation review (ESFP).

This proposal is sent by registered letter with acknowledgment of receipt and details:

• the taxes concerned (income tax, VAT, IFI, capital gains, etc.);

• the tax years concerned;

• the legal and factual grounds for the adjustment;

• the amount of reassessments, penalties, and late payment interest.

Upon receipt, the taxpayer has a 30-day period to respond (extendable by an additional 30 days upon written request).
Failure to respond constitutes tacit acceptance of the reassessment.

Mandatory Elements of a Notice of Tax Adjustment

To be valid, the notice of tax adjustment must contain a certain number of precise legal details.
An omission or error in the justification for the adjustment can lead to the nullification of the procedure.

Mandatory elements include:

• the identity of the issuing department and the signature of the competent agent;

• a clear and detailed statement of the alleged facts and the legal basis invoked;

• the details of the proposed additional taxes;

• the tax years concerned;

• the mention of the response deadline and possible remedies;

• the indication of the right to be assisted by a tax lawyer or a representative of your choice.

A proposal with insufficient justification can be challenged on procedural grounds.

How to Respond to a Notice of Tax Adjustment?

Upon receipt, it is crucial to act quickly. Two options are available to you:

1. Accept the notice of tax adjustment, if you acknowledge the errors indicated by the administration.
   You then indicate your agreement in writing, and the administration proceeds with the collection of the amounts due.

2. Challenge the proposal, if you believe the reassessment is unjustified.
   You then have a 30-day period (or 60 if extended) to submit your written observations.

It is strongly advised to consult a tax lawyer at this stage.
Their involvement allows for the analysis of the reassessment’s justification, the identification of procedural flaws, and the preparation of a legally sound response.

Effectively Challenging a Notice of Tax Adjustment

Responding to a notice of tax adjustment requires rigor and strategy.
An effective challenge relies on:

• a complete analysis of the tax file;

• verification of the legal basis of the reassessment;

• the identification of calculation or procedural errors;

• the drafting of reasoned observations based on the General Tax Code and case law.

The tax lawyer can also pursue hierarchical appeals:

• appeal to the verifier’s hierarchical superior;

• appeal to the departmental interlocutor;

• appeal before the competent Departmental Commission depending on the nature of the dispute (direct taxes, VAT, industrial and commercial profits, etc.).

These appeals are non-binding for the administration but constitute a key step before litigation.

Collection Phase and Litigation

If the administration maintains its position, it issues a notice of collection (AMR).
This act formalizes the tax debt and triggers the payment of taxes, penalties, and interest due.

However, the taxpayer retains the possibility to:

• file a contentious claim with the tax authorities;

• in case of rejection or silence after six months, refer the matter to the Administrative Court;

• in case of failure, appeal before the Administrative Court of Appeal, or even the Conseil d’État (Council of State).

An experienced tax lawyer will assist you in these procedures, ensuring the defense of your interests at every stage.

Specific Cases and Common Errors

Some notices of tax adjustment contain errors that can work in your favor:

• absence or insufficiency of legal justification;

• erroneous calculation of taxable bases;

• non-observance of the statute of limitations;

• absence of signature or mention of the competent department;

• illegal cumulation of penalties;

• confusion between professional income and wealth income.

In all these cases, a tax lawyer can raise a procedural defect to obtain the annulment of the reassessment.