I. Studies, 1. Administration of penalties and interest: The bill requires the Joint Committee on Taxation and the Treasury to each conduct a separate study reviewing the interest and penalty provisions of the Code, and makes any legislative and administrative recommendations deemed appropriate to simplify penalty administration and reduce taxpayer burden. The reports must be provided not later than one year after the date of enactment.
2. Confidentiality of tax return information The bill requires the Joint Committee on Taxation and Treasury to each conduct a separate study on provisions regarding taxpayer confidentiality.
The studies are to examine: (1) present-law protections of taxpayer privacy; (2) the need, if any, for third parties to use tax return information; (3) whether greater levels of voluntary compliance can be achieved by allowing the public to know who is legally required to file tax returns but does not do so; (4) the interrelationship of the taxpayer confidentiality provisions in the Internal Revenue Code with those elsewhere in the United States Code (such as the Freedom of Information Act); (5) the impact on taxpayer privacy of sharing tax information for the purposes of enforcing State and local tax laws (other than income tax laws) and (6) an examination of whether the public interest would be served by greater disclosure of information relating to tax-exempt organizations (described in section 501 of the Code). The findings of the studies, along with any recommendations, are required to be reported to the Congress no later than 18 months after the date of enactment.
3. Non-compliance with internal revenue laws by taxpayers The bill provides that the Secretary of the Treasury and the Commissioner, in consultation with the Joint Committee on Taxation, must conduct a study of non-compliance with the tax law, including tax law complexity and wilful non-compliance or other factors. The study must be reported to the Congress within one year of the date of enactment.
4. Payments for informants The bill requires a study and report by the Secretary of the Treasury to the Congress of the present-law informant reward program (including results) and any legislative or administrative recommendations regarding the program and its application. The study must be reported to the Congress within one year of the date of enactment. The second most important country that has introduced Taxpayers' Charter of Rights is the United Kingdom. Their tax codes contain the following:
UK Charter for Inland Revenue Taxpayers
-- Income tax, corporation tax and capital gains tax
-- Our overall approach to customer service
This Charter covers the service the Inland Revenue provides to customers with regard to income tax, corporation tax and capital gains tax, by a network of local Tax Offices within the Regional Executive Offices, together with the two Accounts Offices and the Enforcement Office. For each tax, our aim is to provide an efficient, effective and fair service. This Charter has been developed after consultation with our customers and staff, and sets out
-- how we will provide you with help and assistance
-- the standards of service you can expect
-- how you can help us deliver an effective service and make suggestions for further improvement
-- where you can get information about your legal rights and other entitlements, and
-- how to complain if you are unhappy with the service we provide.
Providing help and assistance to you
WE PROVIDE HELP
-- through a wide range of clearly written leaflets and booklets. Each explains a particular aspect of tax, or what to do in specific circumstances (for example, setting up a business). These are summarised in our IR list 'Catalogue of leaflets and booklets' and most are available from Inland Revenue offices. Information is also available on our website at www.inlandrevenue.gov.uk
-- over the telephone, in writing or at Inland Revenue Enquiry Centres in person. our leaflet 'How to contact the Inland Revenue', available from all Inland Revenue offices, sets out the main sources of help and information available to you.
-- Contacting us
-- Opening hours
Inland Revenue Enquiry Centres are open for at least 40 hours a week. Most are open from 8.30am to 4.30pm, Monday to Friday, and some are also open outside these hours.
-- Telephone service
Switchboards in Tax Offices are open at least 40 hours a week, including the period between 9.00am to 4.30pm, Monday to Friday. Again, many offices provide a telephone service outside these hours.
-- Addresses
The address and telephone number of your own Tax Office will be at the top of any correspondence they have sent you. Alternatively, details of Tax Offices in your area can be found in your phone book under 'Inland Revenue'.
-- Our standards of service
-- If you telephone us, we aim to
-- answer within 30 seconds (ten rings) at the switchboard
-- connect you to the right extension first time (unless your call has gone direct).
If you visit any of our Inland Revenue Enquiry Centres, we aim to see you within 15 minutes of arrival if you have not previously made an appointment.
If you write to our Tax Offices, we aim to respond to every question or issue you have raised within 15 working days. When this is not possible, we will tell you why, and when you can expect a full reply.
-- However you contact us, we will
-- provide a clear, accurate and helpful response
-- make clear what action you need to take next, and by what date
-- give our names, and
-- be courteous and professional.
In addition, we aim to
-- get every aspect of your affairs right the first time by making full and correct use of the information available to us
-- deal with your repayment claims sent to our specialist repayment offices within 15 working days.
Specific targets and previous year's results
We deliver a national service on income tax, corporation tax and capital gains tax through Regional Executive Offices, supported by two Accounts Offices and the Enforcement Office. The addresses and contact numbers of all these Offices are set out at the end of this leaflet.
The Regional Executive Offices produce customer service leaflets annually, showing
-- performance against the previous year's customer service targets
-- targets for the current year.
Inland Revenue Enquiry Centres can supply a copy of their Region's leaflet.
Leaflets showing similar information for the Accounts Offices and Enforcement Office are available from those Offices.
You can find information on our customer service standards and achievements, together with the service standards operated by the Inland Revenue's specialist tax offices, in the Department's annual report, available from The Stationery Office and on the Internet.
-- Privacy and confidentiality
-- In handling your affairs, we will
-- deal with them on a strictly confidential basis, within the law
-- respect your privacy
-- find a private room or space for you if you visit us to discuss your affairs, should you prefer it.
-- Any special requirements
If you have special requirements (for example, related to a disability) we will provide whatever help we reasonably can. Most Inland Revenue Enquiry Centres have already been equipped with ramps, hearing loops and other aids, and we are installing Minicom systems (for people with hearing difficulties). Some of our leaflets are being converted, on a rolling programme, to Braille, audio and large print. You can find details of specific services in the Regional Executive Office Customer Service leaflets (available from Inland Revenue Enquiry Centres).
If it is difficult for you to visit your Tax Office because of disability or infirmity and if your query cannot be resolved on the telephone or in writing, you may be able to arrange a home visit by contacting your local office.
Please discuss any other requirements with the Customer Service Manager of the office with which you are dealing (you can get their name from any member of staff in the office). They will explain what they can offer to help you. Your legal rights and our codes of practice.
The Inland Revenue produces Codes of Practice explaining our approach and procedures in certain areas of work (especially tax investigations). The Codes explain your legal rights and the rights of the Inland Revenue, and explain what you can expect to happen. Copies of the Codes are available from Inland Revenue Enquiry Centres and Tax Offices.
How you can help us
To help us deal with your tax affairs accurately and quickly, we sometimes need help from you. For example, we may ask you for more information. If we make such a request, please respond as quickly as you can, checking you have provided everything we asked for.
If you contact us, please have ready your tax reference number. (You will find this on your tax return, on any correspondence from us and on your payslips.)
It will also help us if you can tell your Tax Office when your circumstances change - for example, when you get married or change your address.
You are required by law
-- to keep proper records of your income and expenses
-- to complete any return we send to you accurately and on time
-- if you do not receive a tax return to complete, to let us know about any income or gains which have not been fully taxed.
It saves everyone trouble if you pay your tax on time. If you experience difficulty, please advise your Tax Office immediately.
If you disagree with us
You may disagree with our interpretation of the law or the way we have applied it to your particular circumstances. If so, you should let us know why you disagree. Alternatively, if we have already made a formal decision in respect of your tax liability, you are entitled to appeal against what we have done. We will explain how you can appeal when we give you our decision. If we cannot resolve your appeal, you can refer it to the General or Special Commissioners. These are independent appeals tribunals whose decision is binding on both parties. You can make an appeal on the Commissioners' interpretation of the law through the civil courts.
IF YOU WISH TO COMPLAIN
If you are unhappy about the way we have dealt with your affairs (for example, because of delays, mistakes or failure to act on information you have given us), you should complain first of all to the Officer in Charge of the office or unit you are dealing with. Their name is displayed at the head of all correspondence.
If you are still not satisfied, you can refer the complaint to the Director with overall responsibility for that office or unit. (See pages 7-8 of this leaflet for a list of Directors' names and addresses.)
If you are dissatisfied with the Director's response, you can ask the Adjudicator to look into your complaint. Finally, you can ask your MP to refer your case to the Independent Parliamentary Commissioner for Administration (the Ombudsman). The Ombudsman will accept referral from any MP, but you should approach your own MP first. Our leaflet IR120 'You and the Inland Revenue' explains these options.
The Adjudicator's Office also produces a leaflet, (AO1) explaining its role and procedures. Copies of the Adjudicator's leaflet are available from The Adjudicator's Office, Haymarket House, 28 Haymarket, London SW1Y 4SP, or any Inland Revenue office.
LISTENING TO YOUR SUGGESTIONS We welcome your suggestions and use them to improve our service and supporting processes. We supplement this with
-- an annual national postal survey, covering all major customer groups
-- local and Regional office surveys, as appropriate
-- feedback from complaints.
Please make any suggestions for improvement (including this Charter) direct to your Customer Service Manager at your Tax Office or Inland Revenue Enquiry Centre.
Revision date
This Charter came into force on 1 April 1999. It is reviewed annually and (if not amended before then) will be reissued on 1 April 2002".
On the basis of above two case studies, we propose a comprehensive Taxpayer's Bill of Rights in Pakistan containing the following:
1. The strict implementation of constitutional guarantee of treatment and protection in accordance with the law.
2. The strict implementation of constitutional guarantee that no tax will be levied except as provided under Article 77 of the Constitution of Pakistan and the delegation of taxing powers to the Federal Government and the Federal Board of Revenue being violative of Article 162 will not be provided and wherever available are to be withdrawn at once.
3. The implementation of constitutional right of protection of life and property as State's prerogative to levy and collect taxes is conditional to performance of this duty.
4. The guarantee through a law passed by the parliament that taxes collected would be utilised in a transparent manner and would not be subject to unpitying waste and plundering by the rulers.
5. The right to have protection from higher/unjust/unreasonable taxes without voters' approval.
6. The guarantee from the government through a law passed by the parliament of restricting state expenditure of revenue above and beyond inflation and population growth.
7. The guarantee of earmarking of revenue through a parliamentary process for employment generation and socio-economic development of the society as a whole.
8. The right to fair and consistent application of the tax laws of the state by the Department of Revenue.
9. The right to pay only the amount of tax due under the law and to have the law applied as consistently and equitably as possible.
10. The right of protection from abuse and excessive use of discretionary powers available to Tax Officials under tax codes. Such discretionary powers should be structured through open plans, open policy statements, open rules, open findings, open reasons, open precedents and fair formal procedure."
11. The right to be trusted and treated as honest law abiding persons unless proved otherwise.
12. The right to be protected against perverse, arbitrary or unreasonable, unjust, biased, oppressive and discriminatory decisions, recommendations processes, acts of omission and commission of the Tax Officials.
13. The right to be protected against practices of tax collector involving the exercise of powers, or the failure or refusal to do so, for corrupt or improper motives, such as bribery, jobbery, favouritism, nepotism and administrative excesses.
14. The right to be saved from neglect, inattention, delay, incompetence, inefficiency and ineptitude, in the administration or discharge of duties and responsibilities by tax collectors.
15. The right to be saved from harassment through repeated notices, unnecessary attendances or prolonged hearings while deciding cases involving: -
a) assessment of personal taxes;
b) determination of liability of any tax or duty;
c) classification or valuation of goods;
d) settlement of claims of refund, rebate or duty drawback; or
e) determination of fiscal and tax concessions or exemptions;
16. The right to seek assistance from the Tax Collector who should act as facilitator and not as Tax grabber. His office should be a walk-in clinic, especially for the old taxpayer, low-income taxpayer or senior citizens who cannot afford services of the consultant.
17. The right to obtain information and prompt, accurate responses to questions and request for tax assistance.
18. The right to request assistance from an expert of the department, who shall be responsible for facilitating the resolution of taxpayer complaints and problems not resolved through the normal administrative channels within the department, including any taxpayer complaints regarding unsatisfactory treatment by department employees. The expert must issue a stay order if a taxpayer has suffered or is about to suffer irreparable loss as a result of an action by the department.
19. The right to have proper service of notices of any kind and application of all possible modes of service before passing exparte order/ assessment.
20. The right to have prompt refund of additional duty, return of Bank Guarantee or security in the cases of provisional assessments of duty where final assessment is not completed within the period specify under the law.
21. The right to be represented or advised by counsel or other qualified representative at any time in administrative interactions with the department.
22. The right to procedural safeguards with respect to recording of interviews during tax determination or collection processes conducted by the department.
23. The right to be treated in a judicious manner by department personnel.
24. The right to have audits, inspections of records, and interviews conducted at a reasonable time and place except in criminal and internal investigations.
25. The right to freedom from penalty attributable to any taxes administered by the Department of Revenue; and to abatement of interest attributable to any taxes administered by the Department of Revenue, when taxpayer reasonably relies upon binding written advice furnished to the taxpayer by the department through authorised representatives in response to the taxpayer's specific written request which provided adequate and accurate information.
26. The right to obtain simple, non-technical statements which explains the reason for audit selection and the procedures, remedies, and rights available during audit, appeals, and collection proceedings, including, but not limited to, the rights pursuant to this Taxpayer's bill of rights and the right to be provided with a narrative description which explains the basis of audit changes, proposed assessments, assessment, and denials of refunds; identifies any amount of tax, interest, or penalty due; and states the consequences of the taxpayer's failure to comply with the notice.
27. The right to be informed of impending collection actions which require sale or seizure of property or freezing of assets, except jeopardy assessments, and the right to at least 30 days' notice in which to pay the liability or seek further review.
28. The right to have all other collection actions attempted before a jeopardy assessment unless delay will endanger collection and, after a jeopardy assessment, the right to have an immediate review of the jeopardy assessment.
29. The right to seek review, through formal or informal proceedings, of any adverse decisions relating to determinations in the audit or collections processes and the right to seek a reasonable administrative stay of enforcement actions while the taxpayer pursues other administrative remedies available under the tax law.
30. The right of access to his tax information/record kept confidential unless otherwise specified by the law.
31. The right to procedures for the retirement of tax obligations by instalment payment agreements which recognise both the taxpayer's financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule.
32. The right to procedures for requesting cancellation, release, or modification of liens filed by the department and for requesting that any lien which is filed in error be so noted on the lien cancellation filed by the department, in public notice, and in notice to any credit agency at the taxpayer's request.
33. The right to procedures which assure that the individual employees of the department are not paid, evaluated, or promoted on the basis of the amount of assessments or collections from taxpayers.
34. The right to an action at law within the limitations to recover pecuniary damages against the state or the Department of Revenue for injury caused by the wrongful or negligent act or omission of a department officer or employee.
35. The right to settle claims through Alternative Dispute Resolution (ADR).
36. The right to have the department begins and completes its audits in a timely and expeditious manner after notification of intent to audit. The selection of case for audit should conform to the provisions of section 24A of General Clauses Act of 1897.
37. The right to have the department actively investigate and, where appropriate, implement automated or electric business methods that enable the department to more efficiently and effectively administer the revenue sources of the state taxpayers.
38. The right of waiver of interest that accrues as the result of errors or delays caused by a department employee.
39. The right of free educational activities/services to be arranged by the State helping the taxpayer for satisfactory/successful compliance of the revenue laws.
40. The right to pay a reasonable fine or percentage of tax, whichever is less, to reinstate an exemption from any tax which a taxpayer would have been entitled or received but which was lost because the taxpayer failed to properly register as a tax dealer or obtain the necessary certificates entitling the taxpayer to the exemption.
41. The right to be treated courteously and professionally by Department employees and to be answered as promptly as available resources permit.
42. The right to receive a simple, non-technical explanation rights and the Department's obligations in all proceedings and activities involving taxpayers.
43. The right to have personal and financial information kept confidential and to know why the Department is asking for information, how that information will be used, and what might happen if it is not provided. The department may share information with certain federal, state, and local government agencies under strict legal guidelines.
44. The right to obtain basic information concerning the basis for and amount of any tax, interest, and penalties owed or refunded when sent a tax due, deficiency, or refund notice.
45. The right to obtain information about tax exemptions for which a taxpayer legally qualifies. The department will make every effort to inform those eligible for such exemptions.
46. The right to have penalties abated for under payment of tax due to erroneous department advice in written response to a specific written inquiry, provided that the taxpayer gives the department complete and accurate information.
47. The right to enter into instalment agreements in case of hardship at the department's discretion in order to facilitate collection of payments due. The department may require financial statements prior to and during the administration of such agreements and may cancel such agreements in the event of default or change in the taxpayer's financial condition.
48. The right to online and telephone assistance through a website and toll-free telephone network, responsive to answer any query by a taxpayer.
49. The right to have honest, competent, efficient, well-behaved and trustworthy tax officials.
50. The unfettered right of appeal or review through an independent judicial tax appellate system and guarantee of disposal of appeal and revision within six months from the date of filing such appeal or revision as the case may be.
(Concluded)
(The writers tax lawyers and Adjunct Professors at Lahore University of Management Sciences)