Unintentional error in electronic tax return filing did not justify additional tax

A company completed the business tax return section of its tax filing using a standard year-end accounting software program. The employee responsible for the filing accidentally selected the wrong option from a drop-down menu, resulting in income being reported too low to the tax authorities. The Norwegian Tax Administration accepted that the error was not an attempt at tax evasion, but nevertheless imposed a 20% additional tax, taking the view that the mistake could not be regarded as an obvious calculation or clerical error.

The District Court set aside the additional tax assessment and, unlike the Tax Administration, found that the mistake constituted an obvious clerical error. The Court of Appeal reached the opposite conclusion, and the case was subsequently appealed to the Supreme Court.

The Supreme Court reached the same conclusion as the District Court. A majority of three justices held that unintentional typing mistakes or misclicks made during electronic filing must be treated in the same way as traditional clerical errors. In both situations, the decisive factor is whether the information entered does not correspond to what the person completing the return intended to report. The majority found that this was the case here. A minority of two justices, however, considered the mistake to be an error of judgment falling outside the scope of the term “clerical error.”

The error was also considered obvious because the tax authorities could not have failed to detect that there was a mistake in the business tax return. It could not be a requirement that the authorities understand the precise nature of the error.

As additional tax cannot be imposed for unintentional and obvious clerical errors, the decision of the Norwegian Tax Administration was set aside.

Source: Supreme Court