The Federal Board of Revenue (FBR) has noted with concern that the Sales Tax Automated Refund Repository Computer System (STARR), a refund verification program, cannot confirm information submitted by the registered taxpayers through FBR Web-Portal.
Sources told Business Recorder here on Saturday that information about bank accounts of the taxpayers cannot be verified through the linkage system of the STARR with the FBR Web-Portal. The STARR is a computer program to verify data before issuance of sales tax refund. The online data (bank account) through e-filed by the taxpayer on returns cannot be verified by the STARR. This means that the e-filing information and the STARR data cannot be matched to online to verify sales tax refund claims.
According to an FBR report on STARR, the field officers had expressed confidence in the STARR system. They were of the view that since the system had evolved from the business users and had matured over the last few years with a consistent involvement of the field functionalities it has a higher acceptance level.
However, the following few observations were made for consideration of the concerned quarters:
The interaction of STARR with data obtained through e-portal appears to be insufficient, especially with regard to information on bank accounts of taxpayers. STARR system should be automatically populated with the bank account details declared by taxpayers in various forms through the e-portal.
Since STARR has now been centralised, the support service in respect of generation of customised reporting may be enhanced since the same are not satisfactory, the report said.
In the past, it had been reported that the STARR had issued fraudulent sales tax refunds, reflecting loopholes in the refunds payment system, tax experts said.
The STARR, most widely used system, which was launched in 2002, replaced manual checking of documents. It has over 30 checks to clear a refund case. The system failed to check fraudulent payment of refunds. In 2003-04, persons who obtained refunds disappeared in 2004-05. These refund claimants are untraceable, who widely misused the STARR system. Similarly, persons, who obtained inadmissible refund, stopped their business activities in 2005-2006. In most of the cases, refunds were obtained on fake invoices, and claimants remain untraceable.
Tax experts say that a system-based third-party audit is needed to thoroughly analyse the data to check the loopholes in the refund payment system of STARR. The STARR system was unable to check fraudulent payment of sales tax refunds in past cases.
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