The Federal Board of Revenue (FBR) has taken a significant step to improve fairness and transparency in tax collection. This article explains the new measures and their implications for registered taxpayers.
FBR’s New Directive:
The FBR has directed its field offices to provide ample time to registered taxpayers before initiating debt recovery actions. This aims to reduce unnecessary litigation and disputes arising from hurried recovery attempts.
Background:
This directive comes in response to concerns raised by the Attorney General’s office regarding deficiencies in the FBR’s legal department. The Attorney General identified cases where:
- Taxpayers’ appeals were not heard or addressed by the Commissioner (Appeals) before stay petitions were filed.
- The FBR’s legal department withdrew funds from taxpayer accounts soon after issuing “order-in-order” (OIO) notices, without formally serving these notices on the taxpayers.
Legal Framework:
The Income Tax Law provides a grace period for taxpayers to settle their dues before recovery proceedings begin. However, similar provisions are absent in the Sales Tax Act (1990) and the Federal Excise Act (2005).
FBR’s Response:
To address this disparity and ensure fairer treatment for all taxpayers, the FBR has instructed all Chief Commissioners of Inland Revenue to:
- Issue a “recovery intimation notice” under the Sales Tax and Federal Excise Acts.
- Ensure this notice is served on the taxpayer at least seven days before any recovery action is initiated.
Implications for Taxpayers:
- More Time for Dispute Resolution: Taxpayers will now have a designated window to address outstanding tax liabilities or file appeals before recovery measures commence.
- Enhanced Transparency: The requirement to formally serve recovery notices fosters greater transparency in the tax collection process.
- Reduced Litigation: Providing ample time for communication and dispute resolution can potentially minimize unnecessary legal disputes.
Looking Ahead:
The FBR’s proactive approach demonstrates its commitment to a more balanced and taxpayer-friendly tax system. This initiative, along with continued efforts to improve communication and streamline procedures, can help build trust and encourage greater compliance among registered businesses.
