How to Handle Notice from Tax Enforcement Agency
How to Handle Notice from Tax Enforcement Agency: In a third world country, ordinarily governmental agencies tend to abuse powers and tax departments of Pakistan (federal, provincial or city/district governments) are no exception. A taxpayer should know on how to handle notice from tax enforcement agency is key issue which if handled wrongly can cause un-wanted fines, penalties, decreased compliance with tax department and in some cases can also lead to business closure.
Ordinarily, on receipt of a notice (informative and inquisitorial) an ordinary taxpayer of Pakistan is driven by three reactions.
- A reaction of fear
- A reaction of aversion
- A reaction of misunderstanding
In their approach, these reactions are negative, evasive and reactive in character and instead of resolution of the issue there is a likelihood of exploitation or an expedient conclusion which might prove self-defeating in short or medium terms for lawful tax compliance.
On the contrary, a prudent taxpayer and a right-conscious citizen would react to such notice with three positive approaches.
- He would examine as to whether the notice has been issued by exercise of excessive powers beyond the prescribed conditions and limitations cast upon the tax machinery?
- Whether the notice has over-stepped the tax rights guaranteed by the statute?
- Whether the notice has created liabilities without fulfilling the prescribed collateral preconditions in terms of protecting the statutory and fundamental rights of a taxpayer?
- The taxpayer/taxpayer’s consultant would separate factual points and legal points raised from reading/ interpretation of the said notice. This would help taxpayer/taxpayer’s consultant will be in a better position to present facts and law points with proper evidence/ precedents.
As a tax litigation expert, I would like to advise that the pain, confusion and disillusionment of fear, aversion and misunderstanding can be avoided by asking your tax advisers to come out with a solution with respect to your rights, liabilities and limitations, which are always there, on exercise of powers by the tax authorities.
This is the essence of tax justice and access to complete justice is a fundamental right of every taxpayer/citizen.