Lawyers and accountants disappointed at tax dispute proposals
An Inland Revenue Department review of taxation disputes has disappointed the New Zealand Law Society and the New Zealand Institute of Chartered Accountants.
In a joint submission on the IRD’s “Disputes: A Review – An Officials’ Issues Paper (July 2010)”, the societies say that they disagree with the paper’s view that for the most part, no legislative change is required.
“The societies have been urging reform of the tax disputes resolution and challenge procedures for some years now,” the submission states. “As the professional bodies that act for taxpayers and deal with these procedures, we have serious concerns that the procedures are not working.”
The submission says that practitioners from both Societies report the same concern that the current procedures have led to taxpayer disillusionment with the wider tax system.
“We are seeing that attitude consistently across taxpayers in all sectors, from larger corporate taxpayers to medium and small businesses, and from individuals and private family entities.”
The societies say that the procedures are not meeting the purpose for which they were enacted.
“In our experience, taxpayers are disengaging from a process that prices them out of the ability to seek justice and that delays their access to the courts. This is cementing the view of taxpayers that the system is weighted against them and that there is no point in pursuing disputes. This is undermining the integrity of the tax system.”
The joint submission urges the IRD to rethink the approach taken in the Issues Paper. It says it is over a decade since the disputes procedures were enacted and there has been no significant review or reform of the procedures in that time.
“We are concerned that unless there is legislative reform – ensuring there is an opt-out, timeframes apply to the Commissioner, and to balance the system overall – the integrity of the tax system will continue to be undermined. The ability to progress tax disputes with a minimum of delay and cost will also be lost.
The societies say they would be happy to work with officials to help with legislative drafting, and their joint submission provides some draft legislation.