Pre-announcement of audit parameters: FBR, USAID tax advisors yet to take decision

The Federal Board of Revenue and the Tax Administration Advisors of the USAID Competitiveness Support Fund (CSF) have not taken any decision on the pre-announcement of audit parameters. Official sources clarified to Business Recorder here on Friday that the idea of pre-announcement of audit parameters was not floated by the CSF Tax Advisers of the United States Agency for International Development (USAID).
However, this idea was given by the FBR Chairman for pre-announcement of audit parameters. Disagreed with the idea of the Chairman, the CSF Advisors proposed to only announce the compliance related audit selection parameters' for the registered taxpayers which will ensure improved and better compliance. Thus, pre-announcement of audit parameters was basically proposal of the FBR and not the idea of the CSF Tax Advisers.
Sharing details of the issue, officials further stated that it has been reported about the FBR's opposition to USAID tax advisor's proposal. The news is based on the memorandum of minutes of meeting held with Chairman FRB of the CSF Tax Advisers on July 18, 2011. The accurate reading of the memorandum of minutes revealed that in a meeting held on July 7, 2011 between the Chairman, FBR and CSF Tax Advisers, during the discussions the Chairman, FBR opined that the parameters used for audit selection should be pre-announced before the filing of the income tax returns. The CSF Tax Advisers responded that they will evaluate this idea and come up with their comments & suggestions/proposal in due course of time.
In the meeting held on July 18, 2011, the CSF Tax Advisers responded on the issue of pre-announcement of audit selection parameters as under: As a policy they (CSF Advisers) do not approve the pre-announcement of the audit selection parameters. However, following parameters can be announced, in addition to any other parameters to be applied, ensuring better compliance: It included in-complete declarations; declarations not furnished by the due date and declarations not furnished suo motu.
In the meeting held on July 18, 2011 the above response was placed before the participants of the meeting including the Chairman, FBR but no decision was taken on this agenda item. In fact, the CSF Tax Advisers had disagreed with the idea of the Chairman, FBR for pre-announcement of audit parameters and as an alternate, proposed to only announce the compliance related audit selection parameters' which will ensure improved and better compliance. The compliance related audit selection parameters would not only ensure timely filing of returns by the non-filers, but also encourage the taxpayers to submit correct declarations. If a taxpayer knows that his case would be selected for audit due to incomplete declarations or delayed submission of declarations, it would encourage the taxpayers to come forward and voluntarily file their income tax returns and statements.
In the said meeting no decision was taken either on the idea floated by the Chairman, FBR nor the response of CSF Tax Advisers on the issue of pre-announcement of audit selection parameters. Thus it was incorrectly reported what was the proposal of the CSF Tax Advisers as proposal of FBR and reporting a decision by FBR on an issue which remained un-decided in the meeting under reference, official sources added.