How Can an Excessive Volume of Tax Disputes Be Dealt With?

How Can an Excessive Volume of Tax Disputes Be Dealt With? Legal Department December 2013 This Tax Law Note was prepared by Victor Thuronyi, Lead Counsel, together with Isabel Espejo. This Tax Law Note should not be reported as representing the views of the IMF. The views expressed in this Note are those of the authors and do not necessarily represent those of the IMF or IMF policy. Summary Many countries experience problems with tax disputes. In some, a serious backlog of tax cases threatens revenue collection. This paper discusses a range of approaches to reducing the number of cases that go to court, thereby providing background information that can be consulted in dealing with this problem. Mechanisms for dispute resolution in a particular country should, of course, be tailored for the specific country, in light of the institutions, tax administration needs, current practice, and legal framework of that country. In this paper, emphasis is placed on avoiding disputes at the earliest possible stage, and resolving as many disputes at the administrative level as possible, consistently with protecting taxpayer rights. Appropriate organization of the appeals function within the tax administration is discussed in detail. Country examples of dispute resolution techniques are given. At the end of the note, a checklist of measures that could be considered to reduce the volume of tax disputes is provided. Contents Page I. INTRODUCTION ..................................................................................................................4 II. PREFILING MEASURES TO AVOID DISPUTES ............................................................6 III. AVOIDING CONFLICTS DURING AUDITS...................................................................7 A. Dealing with disputes during the audit procedure ....................................................7 B. Dealing with disputes at the end of the audit procedure ...........................................8 IV. PROTEST/APPEALS SYSTEM .........................................................................................9 A. Tax protests ...............................................................................................................9 B. Issues in designing an appeals system.....................................................................10 Decisions qualifying for protest/appeals ..........................................................11 Common or separate approach.........................................................................11 Immediate or deferred collection of the tax. ....................................................12 Payment of interest ..........................................................................................13

How Can an Excessive Volume of Tax Disputes Be Dealt With?

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