Panel 1: The Framework and Justification for Taxpayer Rights
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Panel 1: The Framework and Justification for Taxpayer Rights

October 11, 2019


IAN YOUNG: Thank you very
much, and thank you, Nina, for inviting me
to speak today. I was a willing victim
for the occasion. I was in the audience
full time at the first conference and I had took
the opportunity of being in Washington to go and
see Nina and have a chat with her before the
conference and, if you go to the IRS building in
Pennsylvania Avenue in Washington, above the door
as you walk in, in stone, concrete, whatever, the
words of Oliver Wendell Holmes, who was perhaps
one of the most famous Supreme Court judges in
the States in the early part of the 20th century,
and the quote is: “Taxes are what we pay for
a civilized society.” So that’s what we’re
trying to achieve. But there is, and I’ll
start the story, if I may, in the aftermath of the
Second World War and the setting up of the various
global organizations, one of which was the United
Nations, and then United Nations in the 1940s, had
the universal declaration of human rights, which
doesn’t specifically mention tax, except to the
extent that everyone is said to have the right to
own their own property and no one should be
arbitrarily deprived of that property. And the Council of Europe
was set up in the late 1940s and they produced
one of the most famous documents that they
have produced is the European Convention of
Human Rights, which states everyone is entitled to
the peaceful enjoyment of his property and no one
should be deprived of his property except by
the rule of law. But there is, then,
a protocol which was introduced about a year
later, to the effect that taxes were an exception to
that rule and that people could be deprived of their
property for the purpose of spending money
on public good, so infrastructure, health,
schools, education. But there’s a tension
which is pretty self evident then, that
actually the states are very powerful, the
individual is not necessarily – certainly
not as powerful as that, and you need to have some
means of ensuring that the taxpayer, in this case,
is not overruled, is not subjected to unfair
pressure, is/has his rights maintained by whatever
system you introduce. And it’s interesting that,
in the panel, and our moderator, we’ve got lots
of different approaches the way you safeguard the
interests of the taxpayer. So it’s in law in the
Netherlands, we have a statute provision in the
UK saying we have to have a charter, but there is no
provision about what the charter shall contain,
and we now have different rules in the United States
and different provisions in Australia. So there are different
ways to getting to an answer. And one of the things that
has happened since the first conference at the
end of 2015, I’m just thinking about
this morning, I was instrumental in rewriting
the UK’s charter, which was published in January
last year, the European Commission has finally, in
November, ended a three or four period of work, and
produced a taxpayer code. The Inspector General of
Taxation in Australia has produced a review, which
he published in December, about taxpayer’s charters
in Australia and looked at the experiences in other
countries, including the UK, U.S., and Canada, and
the IBFD, which is going to be the host of the
third conference, has produced a piece of work
which followed from the International Fiscal
Association’s congress in 2015, and it set up an
observatory of taxpayer’s rights, and it did a piece
of work which you may have seen, which is the
practical protection of tax – fundamental
taxpayer’s rights, and I wrote the UK chapter
for that, so I’ve been involved in this space
for a little while. And also, the European
Union codified the way in which it had protected
rights, either in the Court of Justice or in
directives, and it came up with a Charter of
Fundamental Rights which got statutory,
legal force in 2009. So there are lots of
different organizations which have been
involved in this area. So going back to a very,
very long time, King John, in the early 13th century,
was oppressing his barons and they got him to sign –
it wasn’t that you signed, but they got the Magna
Carta was agreed in 1215. It quickly was overruled
by the Pope at the time, so it didn’t last very
long, but it did act as an iconic sort of reference
point for people subsequently that were
trying to restrict the power of the authority of
the king, the powers that be, to oppress
their citizens. And if you were in London
in 2015 – [pause] the British Library had an 800th
anniversary exhibition and there are four copies of
the Magna Carta and they were all on display for
a few days in the British Library in Euston
Road in London. And Lord Denning, one of
our most famous jurist judges of the 20th
century, said the Magna Carta was the foundation
of the freedom of the individual against the
arbitrary authority of the despot, and that battle
has continued forever after. And Philip Baker is in the
audience today, said of tax charters, that
they’re a short accessible statement of the basic
rights and obligations in dealing with tax
authorities, and they’ve been around probably
for about 30 years in my estimation. We had a charter in the
UK, first in 1986, and that was largely for
mainly negative reasons that the, and then revenue
as it then was, was in somewhat disarray. They weren’t able to
answer the post in any meaningful time frame,
and they were throwing the post away rather
than answering it. It wasn’t a very good
way of dealing with the taxpayers’ sort
of concerns. So the then Chairman
of the Board of Inland Revenue introduced a charter,
much to the – not horror but – much to the it was not supported by the people who worked in Inland Revenue in those days,
so I’m told by people who were working
there, but, nevertheless, that was the
first charter. And then when we had a new
government in 1990, John Major, who was our Prime
Minister, wanted to make sure that we’d have a lot
of privatization, a lot of public authorities had
moved into the private sector, but the Prime
Minister wanted to make sure that the citizen,
the UK citizen, would understand what any
particular public authority was supposed to
be doing, and would also understand what rights the
individual had of redress if the public authority
didn’t do what it should be doing. So we had citizens
charters, and we had a second version of the
taxpayer charter in 1991, which was more
recognizable as the sort of charters that you’ll
find around the world today. And then, the John, I’m sorry Tony Blair became the Prime Minister in 1997 and he had a
different perception of how you measure the
performance of public authorities. It was all about targets
and other ideas, and the charter, our UK charter,
disappeared from view, it’s fair to say. I did have an argument
with – it had, by then, become HM Revenue and
Customs, as to whether the charter was still in
existence, but it was pretty clear to me
it had disappeared. So we had a new charter,
and that was because, when we had joined together the
two revenue departments in the UK, the Inland Revenue
and Customs and Excise, to form HM Revenue and
Customs in 2005, we’d reviewed and changed
the powers of that new authority. The HMRC decided that it
would be only reasonable that we should now seek to
protect the interests of the taxpayer against the
extra powers that the authority had
taken to itself. So we had a debate,
consultation in 2008, 2009 and by that stage, HM
Revenue and Customs was also paying out money as
well as collecting money, so it was an organ of
the government’s social security program, that was
paying out quite a lot of money as well as
receiving a lot of money. So instead of calling it
a taxpayer’s charter, we called it Your Charter but
also, in debating it and making it a statutory
requirement that there should be a charter,
Parliament said that there needed to be a committee
which would oversee the work of HMRC in
protecting the taxpayer. So a charter advisory
committee was set up, and one of the conditions that
Parliament insisted on, was that there should be
a majority of non-HMRC people as members of that
committee and I was a member of that committee,
and then for three and a half years I was
the chairman of that committee. And then, in 2006, as I’ve
mentioned earlier, we had a new charter. I was responsible for
organizing what finally became the new charter,
and I’m now – I have been for the last 15 months
– an advisor to the new charter committee and I’m
just about to stand down. So I’ve been fairly
involved at the center of what the UK’s activities
in charter work. [Pause] So, we look at approaches
to the taxpayer’s charter. So the European Commission
has come up with a model of a European Taxpayer’s
Charter, the OECD, and I think one of the things
which has happened is that the because the U.N. wasn’t very active in tax
work in the post Second World War period, when
OECD was founded in 1961, it took over the
responsibility for the tax system and principally
got involved in double tax treaties and, lastly,
transfer pricing, and it wasn’t really focusing
on taxpayer’s charters. So although it’s kept an
eye on what’s going on, it hasn’t really been at the
forefront of work in this area, I would say. Jeffery may disagree with
me, and he will tell me afterwards in the break,
but I think the drive has been elsewhere. And then the organization
of which I am a member, the Fiscal Advisors in
Europe, produced a model taxpayer charter so we did
a survey and we produced this last year, and it’s
more than the principles which should be enshrined
in a charter, it’s also about the sort of
parameters of a tax system which are going to provide
adequate safeguards for the taxpayer, and that’s
available on their website. So turning to the Eurpoean union,[pasue] my slides are in a slightly different order so I will speak, the CFE, the Model
Taxpayer Charter, it basically set out 10
rights and 10 obligations which are displayed on the
screen, and you’ll find although there’s a lot of
disagreement about how you actually make it work in
practice in individual countries, there’s a
fairly common sort of theme that when you look
at actually what is in individual countries,
taxpayer’s charters, as to what they say, so the
authority must act with integrity and be fair to
the taxpayer, you need some certainty
for the taxpayer. You need a system which
actually works, which is efficient and effective. If it doesn’t work
well, then that’s to the detriment of the taxpayer. If things go wrong and you
can’t resolve them in a reasonable way you do need
to have some mechanism by which you can appeal
against the decision of the authority. You need to make sure –
tax systems are inevitably very complicated. We live in a complicated
world, and you need be, to have some appropriate
assistance from the authority so that you
can understand what it is you’re supposed to do and
how you’re supposed to do it. And, in the majority
of countries, it’s very important that the affairs
of the individual taxpayer are kept confidential
and are not put into the public domain. And clearly, you need
to have a system which ensures that you pay the
correct amount of tax. You don’t want to pay more
than you should and the tax authority doesn’t want
you to pay less than you need to. And representation, I
work for, I have an organization which has
tax advisors amongst its members, so you need to be
able to be free to appoint somebody to help you to
deal with the tax system. You need to have the
ability to have somebody to represent you and to
explain to you what the tax system means and
what you need to do. And you also need to have, the tax authority needs to believe that you are being honest unless self-evidently you are not. The UK Charter is going
to be covered in the next presentation so I won’t
go into that, and it says similar sorts of things
as the CFE charter, so I won’t go through
those rights. And there are some
questions about charters: so, should it be on
a statutory basis? We just, in the UK, have a
provision which says that the HMRC must aspire to
reflect the principles in the charter, and we have
a committee, as I’ve mentioned, to try and
ensure that that is the case and, at the moment,
I think we’re in, if not a sweet spot, we’re at least
in a position where I think the UK authority is
very keen to be seen to be acting in accordance with
the charter and doing everything that it can to
make sure that it works in practice. There have been debates in
the past about whether you should include obligations
as well as rights. I’ve always been pretty
clear, myself, that charters need to set
out the rights of the taxpayer, but equally give
them obligations as well, because the majority of
countries now have self assessment, it’s down
to the individual to understand what they’re
supposed to do in the system and to do it, so
if they don’t have some obligations then the
system won’t work. Whether the rights and
obligations are linked, I don’t think they are. I think there are two
sides of the coin, but they’re not
inextricably linked. You don’t get rights
because you have fulfilled your obligations,
I don’t think. But I think the most
important thing about a charter is the core of the
tax system, which is not disputatious, I don’t
think, it’s just individuals trying to make
sure that they do what they’re required to do to
fill in the forms they’re required to fill in, to
pay the tax if there’s an extra payment of tax to
be made, and there needs a culture of understanding
between the tax authority and the taxpayer. So in the large business
world that has become characterized as
cooperative compliance, that there is a genuine
and often robust relationship between the
tax authority and the taxpayer, and I think
something like that needs to be replicated in the
private individual sector of the tax system. And the UK authority tells
me that they collect, pretty automatically,
about 90% of the tax that needs to be
paid in the UK. About 3% needs a bit more
of an effort, so there’s a bit more of a dispute
about that, and about 7% is what we call our
tax gap, which is not currently collected. But most of the tax systems
depend upon compliance, good working relations
between the tax authority and the taxpayer, and
I don’t think you can encapsulate that in law
and, if you do, it’s not a very good system if you
have to then take legal action to ensure that
the authority does what they’re supposed to do. I think there’s a
behavioral inert to taxpayers’ activities and
their relationship with the tax authority which I
think is crucial and key to a good tax system, and
a system which supports the rights of
the individual. So that’s all
I have to say. I think, I mean, it’s interesting and I’ll just end on the OECD. They produced a survey
of legal systems in 1990. They think there isn’t a
physical copy of it, but I’ve got one, so. [laughter] I bought it second hand
from a library somewhere, but one of the things they
said, so it’s almost 30 years ago, and it was
talking about changes to the tax system, and it
says: and other major changes in the
relationship between the taxpayer and the tax
administration, many countries are seeking
to improve the service provided to the taxpayer,
in part because modern tax systems require increased
cooperation from the taxpayer if they’re to
operate efficiently, and also as a result of
changing attitudes that the role of the tax
administration vis-à-vis the taxpayer. This cooperation is more
likely to be forthcoming if there is mutual trust
between the taxpayer and the administration, if
the taxpayers’ rights are clearly set out
and protected. And for the next two days,
we’ll be talking about all the nuances of that and
how we actually ensure that that does actually
happen, and what are the challenges that
we are facing. And I think we’re facing –
the two challenges that I see, facing us, is that
we’re all going to have much more
digitalized systems. We’re all going to be much
more in the cross-hairs of the system than
we are at present. We’re not going to be
outside the system making an annual return and
that’s it on paying our taxes. We’ll be right in the
middle of the tax system. And I think how that is
dealt with by the tax authorities, and how that
plays out in terms of taxpayers’ rights I think
will be interesting and challenging for us. I think the other major
change is that the big data that we hear about,
the work that the OECD has been doing in terms of
getting transfers or exchanges of information,
particularly about financial accounts, the
common reporting standards gets going later
this year, the U.S. has had FATCO, the Foreign
Accounts Tax Compliance Act of 2010; there’s
going to be a lot more information available
transferred to tax authorities and they’re
going to know much more about the taxpayers than
they currently do, and I think that’s both, may make the
tax system easier, but it may make it more
threatening to the taxpayer, and I think
those are the two sort of major changes that I can
see that are potentially going to cause
difficulties, threats, opportunities, whatever
you choose to call it. So I think wisely Nina has
told us that she’s already planning for the third
conference and she’s got the fourth sort of in
the planning stage for Minnesota, if I remember
rightly, in 2019. So we’re going to be on
this – this is a journey. We’ve been sort of 30
years on it so far. I think there’s
plenty more to go. There are plenty of
differences between the different countries. There are already quite a
lot of challenges, which you’ll hear about for the
next two days, but I hope that’s been a helpful
introduction to what you’ll hear in
the next two days. PETER: Thank
you very much. [Applause.] Thank you very
much, Ian, for giving us the framework for
taxpayer’s rights. I think the U.K. and the Netherlands, they
share experiences with the concept of cooperative
compliance, and you also mentioned the importance
of culture with respect to taxpayer’s rights. Well, my experience
is that the tax administration always
says, well, cooperative compliance can only work
if you consider a taxpayer as a kind of friend,
as a kind of colleague. So you don’t need
rules for that, but you understand that doesn’t
work because you can only always come into kind
of conflict and for this conflict you need rules. You need rules for
situations in which you disagree, in which you
want to go to court, and then you cannot have the
argument of the government saying, well, you said
we were friends and now you’re angry. [laughter] No, that’s not the
way it should work. Thank you very much. Now I give the floor
to Elaine for the UK experience – [Pause] ELAINE BENN: Thanks. Good morning everyone. My name is Elaine Benn. I worked for HM Revenue
and Customs program three and a half years now;
prior to that I worked for one of the big spending
departments, the Department for Work and
Pensions, so it’s a great pleasure to be working for
one of the big departments which brings in the money
which funds those taxpayer services. I’m the Central Customer
Director, and what that means is, it’s my job to
make sure that customer needs and customer
perspectives are put at the center of the tax
system both in terms of the way in which we
transform that system and modernize it, but also the
way in which we run it. So I have a big behavioral
and customer insights team, we work alongside
customers as we design systems, and we are
increasingly trying to make sure that we bring
customers alongside us, and we look at their life
events and their business events and we design
around those rather than the detail of an
individual tax process or an individual tax product. So it’s a fantastic job
to be able to speak for customers and part of
that is that I manage the charter full on the
charter committee, which Ian referred to. So I thought it would be
interesting to try and bring the charter to life
a little bit so rather than talk about theory,
mine is a talk about the practice of running
a charter in action – [Pause] So I will just very
quickly touch on the mission and goals of
Revenue and Customers, a little bit about the
customers that we serve, and then talk about the
way in which the charter has been used in a couple
of ways to shape the Revenue and Customs
approach going forward. And a bit of reflection on
what’s working well for us and what might
be even better. [Pause] So, as in common with
most tax authorities, of course, as Ian said, we
are a tax, a payment, and a customs authority, so we
pay money out as well as bring money in, so we
collect the money to pay for the UK
public services. We help families with
targeted financial support so that it is better to
work than be on benefits, so we pay out support for
families with children and for low paid families to
help them support their families through working
and giving them a little bit of extra money to
supplement their wages. And we help the honest
majority to get their tax right, and we make it hard
for the dishonest minority to cheat the system. And we do report to
Parliament through our Treasury Minister, who
oversees our spending, so I think that’s probably
a fairly common theme for many of the tax
authorities around the world. HM Revenue and Customs
loves its facts and figures, so I thought I
would share a few with you today. We’re actually one
of the UK’s largest organizations, so many
of our own staff pay tax, indeed many of them
receive tax credits because the vast majority
of our staff are in rather junior grades. They sort of make
the tax system work. So we have around
57,000 employees. We support around 45
million individuals and, as Ian said, the vast
majority of our tax comes in automatically. As you get paid, we
already take the tax and national insurance
contributions from you. You don’t get much choice. It’s taken from you before
you are paid your net salary through
your employer. So most of the tax
revenue comes into us automatically. We also deal with around
5 million business, 4.8 million businesses. Many of those are the
big businesses, but increasingly the
self employed, small businesses, the sharing
economies a growing factor of our tax system. Our interactions with
our customers are also at scale, around 60 million
phone calls a year, around 50 million letters, but,
of course, we’re getting into the digital age now. We have a business tax
account and a personal tax account where you can view
your tax affairs online in much the same way as you
would with your tax, so increasingly, I think
around 9 million people now are opening up their
personal tax account. We only recently launched
this a year or so ago. So, for us, the shift is from
dealing with traditional post and telephone into
the digital tax account. And overall, we collect
around 500 billion Pounds a year in tax, but we
also, as I said earlier, we pay out tax credits and
child benefits to large numbers of our customers. So that’s us in a word. We deal with people just
about every single person across the UK, from cradle
to grave, really, through the child benefits through
to end of life support and the like. We are a non-ministerial
department that’s intended to protect us and make
sure that the tax system is impartial and that the
policies that we have, generally speaking,
survive the sort of the political influences
of the day. [Pause] So into the charter now. I think this ticks most
of the boxes that Ian was referring to when he
talked about all of those studies into the different
kinds of elements of charters and the
best practice. So, these are some headlines,
and as you will see, it equally sets out rights,
what you can expect from us as a tax authority, but
it sets out obligations, too-what we expect
from our customers. And the headlines are
underpinned by broader statements to bring them
to life a little bit. So, for example, the first
one is around respect. We will respect you and we
will treat you as honest, so we’ll treat you even
handedly with courtesy and respect. We’ll listen to your
concerns and answer your questions clearly. We’ll presume you’re
telling us the truth unless we have good
reason to think otherwise. So we take each of these
statements and we give our taxpayers a little
more information. So, for example, we also talk
about providing a helpful and efficient service;
that’s what our customers can expect from us. So, we’ll help you to
understand what you have to do and when
you have to do it. We’ll deal with the
information you give us quickly, efficiently, and
we’ll keep any cost to you to minimum and we’ll put
any mistakes right as soon as we can. So as we go through each
of the rights and the obligations, we try and
explain this in simple terms to bring it to life
for our customers because when we reviewed the
charter, one of the things that we wanted to do was
to make it an outward facing charter, to make it
equally balanced between rights and obligations,
but to be able to bring it to life for people in
plain English, in simple terms, so that people
could challenge us if we weren’t living up to our
rights, to your charter. So, you will see that we’re
offering, we will act professionally and with
integrity, but we will provide security for
customers’ information and respect their privacy, but
we will allow them to be represented, whether
that’s because they have complex tax affairs, they
just feel a little bit more reassured in dealing
with the big beast of revenue and customers
if they have someone alongside them
representing them, or if they have
particular needs. They may be disabled, they
may need a little bit of help because English isn’t
their first language in dealing with the tax
authority, so we accept that people can
be represented. And we also say that we
will handle complaints quickly and fairly. And I’m going to touch
on complaints in a little while because that’s one
of the ways in which we’ve brought the charter to
life and I’ll give you an example of that
in a moment. But we also make clear
that we will tackle those who bend or break the
rules because there’s this great British sort of
sense of justice running through our tax system. People expect us to chase
people who don’t play by the rules and who don’t
pay their fair share quite rightly depending on
whether you believe what you read in the media, at
the moment, in Revenue and Customs, I think that
most people trust us as an organization. We have a pretty good
reputation for actually administering the tax
system fairly in the UK. People may occasionally
argue with us. They may think that we
are a big tougher on the little man and that we
let big business and international business
off, they may grumble that our service isn’t,
perhaps, always as quick as they hope it might be,
although in the last sort of year or so, our service
to customers has really massively improved, and
bears no relation to those days that Ian
referred to earlier. So if you want to contact
us you can get through on the phone very quickly,
indeed, or you can deal with us online,
whichever way suits you. So, generally speaking,
the UK taxpayer, and we do service, of course, from
time to time, believes that HM Revenue and systems
can be trusted to run the tax system. But just a little bit
around obligations, too. We expect customers to be
honest and work with us to get things right and to
make sure that they have reasonably accurate
records; that if they have a representative who deals
with their tax systems on their behalf, and they
have to make sure what information and payments
their representatives are sending us, and that that
is accurate and comes in on time. So that’s our charter. As I said, it covers most
of the territory and to make sure that we actually
deliver on that charter we have a charter committee. It’s a subcommittee of our
board, our board who run the revenue and systems,
so it is their role to make sure that we deliver
against your charter so they advise the board on
whether our strategies, our policies, our
practices and services, and the way in which we
measure those services, are effective in
relation to the charter commitments. They provide
recommendations on improvements and they
provide an assurance that your charter is being
delivered in line with the undertakings given to
Parliament, so each year, an independent annual
report is published which sets out how Revenue and
Customs has performed against its charter
obligations. And, as Ian was saying
earlier, the charter committee is made up
largely of customer representatives and
non-executive directors of Revenue and Customs, so
our Chair of the Board attends and people like
me, and our director generals attend but the
vast majority of people sitting on our charter
committee are from outside HM Revenue and Customs. They are representative
of the customers that we serve and we refresh those
charter members every two or three years so
that as those charter representatives get to
know a little bit more about Revenue and Customs,
sometimes they can sympathize with our
problems, sometimes they can understand why maybe
it’s quite hard to live up to those charter
commitments. But we want to keep
the challenge there. We want to keep
them bringing in new perspectives and bringing
best in class from outside Revenue and Customs and
outside government, so from time to time we
refresh our charter membership so, if you
like, they keep giving us a tough challenge and
stop sympathizing with our problems. It’s their job, actually,
to push us to be as good as we possibly can be – [Pause] Just a little bit about
what customers can do if they disagree with
Revenue and Customs. They have a whole range of
options available to them, and I won’t talk about
these in any depth other than to just touch on
complaints in a moment. So, if you are a taxpayer,
you have the right to complain about the
service that you have been offered. You have the right to
ask for your case to be reviewed and reconsidered
if you don’t agree with the decision that
we’ve given you. You can go to an
appeal or a tribunal. You can get involved in
what we call alternative dispute resolution; it’s
just a way of bringing parties together with
mediation to try and resolve complex tax cases. And, of course, you can go
down the route of sort of litigation. So there are a whole range
of ways in which – we hope that you don’t have to –
but you can, if you wish, disagree with what we’re
saying about your tax affairs. And one example of the
charter in action is around complaints. So part of our charter
commitment is that we will deal with complaints
quickly and fairly and we had an ambition of
complaint’s ambition which set out the way in which
we wanted to do that and it served us pretty well,
but it came to a review period where we felt it
was a little bit inward looking. So the charter helped
us to refresh that complaint’s ambition, the
statement of how we will deal with complaints
from our customers. So, just a little bit about
how complaints work. Of all of those millions
of interactions we have with customers, typically
in a year we get around 80,000 complaints
from customers. Around 80,000, and the vast majority
of those are dealt with satisfactorily. Customer may not agree
with the outcome, but they have decided at that point
that they won’t pursue that complaint
any further. So the vast majority,
around 92% in the yellow box, get dealt with by a
customer complaining and somebody independent,
somebody else in HM Revenue and Customs will
take a look at that case and see whether it’s been
dealt with satisfactorily. If a customer isn’t happy,
they can ask for someone else to take a look at
that and, again, someone else in Revenue and
Customs takes a look. But we also, then,
have an adjudicator, an independent adjudicator,
who will look at complaints from an
entirely independent perspective and she gets
around 1200 complaints a year, so of those, most
customers either have their complaint
upheld or overturned. So, at the moment, the
adjudicator upholds or overturns around 40% of
those 1200 cases so they hold Revenue and Customs
to account for dealing with complaints fairly,
either in accordance with the regulation, or with
what you might call some empathy. So the adjudicator can
uphold the case if she thinks we have either not
followed the rules and regulations, or we haven’t
considered the customer perspective. So maybe we were right in
law, but the customer was in a position where
either, perhaps, the system had been a little
bit unfair to them, or they couldn’t afford to
repay or whatever their personal circumstances
haven’t been taken into account. So the vast majority
of cases are dealt with through internal systems,
cases then go to the adjudicator, she
upholds them, and then, eventually, you can go
to the Parliamentary Ombudsman, who upholds
around 10% of the complaints against us. So we’re quite open in
public about complaints, and we said we want to
be the best in Whitehall; that was our
complaint’s ambition. We want to be the best
at handling complaints in Whitehall. But when we learned from
our adjudicator, when we discussed this with our
charter and our people, we decided that wasn’t a
terribly ambitious thing to be. Actually, you know, we
were pretty much the best at handling complaints
across other government departments, but what the
charter committee made us do was think about
comparing ourselves with industry. How would we compare with
best in class outside government? That was a much more
ambitious thing to be aspiring to. And, actually, when we
shared that with our staff they agreed. They didn’t want to be
the best in class in Whitehall, they wanted
to be the best across industry. They wanted to look at big
institutions like, I don’t know, Marks & Spencer,
and Virgin, and other big companies who we thought
in the UK, generally speaking offered a
great service to their customers. So that resonated with us. But what the charter made
us do was really reflect on are we learning
from those complaints? So our new charter gives a
commitment to really learn from complaints, what is
it that causes customer’s to complaints? Where are the pain
points for our customers? That’s the thing that they
said we should really put the focus of our attention
on: learning from complaints and tackling
the root causes in the system which cause pain
and anxiety for our customers. That’s just one way
in which the charter influenced the way
in which we deal with complaints and the way
in which we operate. So, very briefly, I just
want to reflect, now, on what works well for us
about our charter and where we could
be even better. So, I think our charter works
pretty well with the culture of the UK. I’m sure we’ll discuss
this a lot over the coming days as we compare
different systems. It fits with our sort of
tradition in Parliament, it fits with particularly the
annual report where we have to get that independent sort
of assessment of how we’re doing. It fits with the way in
which the public views HMRC. We have recently refreshed
the membership and brought in a much broader range of
customer representatives and the fact that we are
going to refresh that membership every few
years, I think, will be for us, refreshing in terms
of the challenge that they keep bringing to us,
so we’ve now got a much broader range of our
customers represented around the table. It has a very high profile
in HM Revenue and Customs, so to get the chairman of
the board along to have membership of our director
generals, this allows our charter representatives to
challenge the executive. We bring topics to the
charter committee early in the formation of policy
or implementation so the charter representatives
are able to shape the way in which we do that. So, recently, we
have published some consultation on how we
digitize our tax system and the charter
committee reviewed that. They have presentations
from the people who are developing the plans, and
then they publish their own response to the public
consultation from their charter perspective. So I think that shows that
they are able to influence the way in which the
executive operates. And I’ve mentioned
earlier, that independence, so that once
a year they get the opportunity to publish
their own reports. My team helped them by
pulling together the words, but the words are
actually the charter’s own. How can we improve? I think our charter will
be more effective as a committee if they focus on
fewer things and they get into them in more detail. Our latest charter
committee has been operating for a year, and
the first year they’ve largely been getting their
heads around the enormous complexity of the tax
system and how we operate, and they wanted to
look at everything. They were interested in
exploring everything at first. What that meant was, we
were having to bring them up to speed on a huge
range of things, and they were just skimming
the surface. So what we’ve agreed, for
the year ahead, is that they will tackle fewer
topics, but they will get into much more depth, and
they will visit the front line, they will
understand, from sort of cradle to grave, if you
like, how a process works and how customers
are affected by those processes. So, initially, it was
a bit broad ranging. If we narrow it down
it will work better. And that’s a balance of
discretion between rights and obligations. I guess it is the natural
instinct of a charter committee to focus in on
rights, but one of the most difficult things we
do is to help customers to keep their tax affairs
right, so I think we can benefit enormously if the
charter will help us focus in on how we support
people in their obligations as well. We need to do more to
embed the charter right across the organization. The people, like me,
are passionate about it. I have charter champions
whose job it is to push that out across the
organization, but Revenue and Customs, as you
saw earlier, is a huge organization and so
we have a challenge at getting every single one
of our members of staff to embed the charter day
in, day out in the way in which they deal with
customers so there is much more for us to do there. And then, finally, keeping
our discussions evidence based. We all tend to relate
the tax system to our own personal experiences, and
those of our family, and there is a tendency for
some of the discussions to be based on those
anecdotes but actually, you know, we always have
to reflect that maybe we’re not typical of
the taxpayers at large. So keeping our discussions
based on the evidence of the experience of all our
customers is a challenge for us in those
committees. So I think success, for
me, of a charter in action looks like this, and that
is, an organization which embraces the charter and
has that embedded in every element of its dealings
with the taxpayer, and running through all
of its sort of staff’s consciousness, but also
the fact that, at the end, the board of the Revenue
and Customs feels as though the charter
committee has really challenged it, has really
brought best practice into its thinking, and made a
practical difference to the outcome of the charter
and the service it gives to its customers. Thank you. [Applause] PETER: Elaine,
thank you very much. You have shown us that a
lot has changed since the Magna Carta where we
talked about the arbitrary authority of the despot,
the UK tax administration doesn’t behave anymore as
a despot, nevertheless, of course, the position of
the taxpayer is not the same as the position
of a tax inspector. There is not the same
balance of power as in a contract, and that is also
important if you look at the obligations mentioned
in the charter for taxpayers and you must be
honest, keep us informed, we will work together. But, of course, there are
also situations where a taxpayer has a right to be
silent because he can be considered to be suspect
and he should not incriminate himself, and
where is the borderline? It’s always the tax
administration has a lot of power compared to
the individual taxpayer. Well, we’ll have a look
at that at the debate. Now I would like to
give the floor to John Bevacqua. [Pause] The floor is yours. JOHN BEVACQUA: Hello. My name is John Bevacqua,
and I’m an academic from Australia and I’ve
submitted a paper that, in academic style, goes into
great length and detail on a lot of case law. I have dabbled in this
paper, which is a bit of a danger, in jurisdictions
outside of my own, so I looked at Australia, and
then some of the Canadian and U.S. and New Zealand case law,
but I don’t purport to be an expert in any of those
jurisdictions other than my own. But all of that doesn’t
matter because I’m going to do away with academic
rigor and I’m not going to discuss any of those
cases, but what I’m going to do today, there’s
really two things I want to discuss in this paper. The first one is a
problem, a potential problem I see where we may
be unwittingly creating tax exceptionalism in
dealing with taxpayer complaints against tax
officials, or taxpayer clients against tax
officials, through the use of public policy and this
particular public policy that I’ll discuss
in a moment. And then, I want to
discuss, or raise, a few ideas I’ve had on how
we might deal with that problem in a slightly
more, I won’t say scientific way, but
perhaps a little bit more of a nuanced way. But I’ll start by putting
where this idea came from, or where my concerns come
from in a little bit of context. I spent most of my
academic research career interested in the ability
of taxpayers to enforce the rights that they
notionally have; so, the ability of taxpayers to
have practical relief. And, as Peter said before,
I think that, you know, we can all be friends, but we
have to have rules and I will take that a step
further, that I think we need to have real remedies
for taxpayers when those rules are broken. And so I’ll spend a lot
of time looking at how taxpayer rights translate
into real remedies, particularly where
taxpayers seek compensation or forms of
declaratory relief for breaches of their
rights by tax officials. And what I’ve found, in
looking at those cases and considering those issues,
is some common theme, some common threads of public
policy issues being used, or coming up in some of
these cases quite often, to deny taxpayers relief
in situations where they might otherwise have
had quite a strong case. And one of the issues that
comes up quite frequently, and I’ve seen this across
the jurisdictions I’ve looked at, is this concern
about a chilling effect that imposing liability
might have on tax officials. So I’ll just explain
what that is. There’s a third thing
I’m trying to do today is really overwork a
pretty obvious pun. [laughter] So, excuse me for that. So what is the
Chill Factor Effect? Well, the Chill Factor
Effect is a concern of potential overreaction by
a tax official, an over defensive response in
the event of claims by taxpayers being
permitted against them. And it comes up in a lot
of different contexts. It struck me, when Elaine
was talking about the UK charter there before,
she mentioned, you know, helpful and efficient
service and information provision as being key
commitments, and you see this across the
board in charters. Well, one of the concerns
of the Chill Factor is that if tax officials are
concerned that they might be sued at every turn then
they’ll start to freeze up, they’ll start to
hesitate in providing that efficient service, that
provision of information. So, for example, they
might not provide information at all if it
particularly seems particularly risky, or might not only provide
that information after lots of time consuming
consideration and expensive legal advice to
make sure that, you know, there’s nothing wrong in
it that they could be sued over. And there are lots of
other manifestations that come up in the cases,
right through to discouraging people
from wanting to be tax officials at all. You know, if I’m worried
that I’m going to be sued why would I want to
become a tax official? And that’s not
a good thing. So there are a whole lot
of ways in which the Chill Factor Effect comes up,
and there’s some inherent logical appeal to that. You can see why it’s
attractive to a judge considering a case to say,
well, gee, I don’t want to risk these potential
chilling consequences here by finding in favor
of the taxpayer. But when you dig a little
deeper, and this is what I’ve tried to do in my
paper, to see whether this Chill Factor actually
exists and then whether, in the tax context,
it exists and if tax officials need that
special treatment that Peter referred to before,
I come up pretty empty handed actually. So in terms of does it
exist, well, there’s plenty of research over
the years into Chill Factor effects and public
officials generally, but it’s pretty inconclusive. It swings in
either direction. Some findings suggest that
the Chill Factor Effect is a real phenomenon and
it’s demonstrably true, in other situations there
is no such finding. For example, the
most broad reaching Austral-Asian study found
that public officials generally don’t respond
either defensively – overwhelming don’t respond
over defensively to adverse judicial
determinations. In fact, I see that most
officials view it, view those findings as a
valuable and instructive incident. So I’m not sure that
– yeah, I mean, again, intuitively – but I don’t
see that being correct, but that’s what come out
of the research by people who have actually
looked at the issue. So there’s at least
some, some doubt here. And in the tax context,
I can’t find any tax specific studies here. I can’t find anything that
actually considers whether or not tax officials are
particularly prone to reacting over
defensively or not. They give commentary along
the way, so, for example, well, some of the things
that have come up, it seems, from the
commentary, the answer to whether tax officials
deserve special protection here, whether they’re
prone to behaving over defensively depends
on lots of things. So it depends on their
level, and their role within the organization,
and the extent to which they might be subject
to personal liability. There are suggestions in
some of the commentary that no, no, tax officials
respond more to political pressures rather than
economic pressures, perhaps. Even if you put all that
aside, surely it will depend on the jurisdiction
as well and the framework of obligations on
tax officials in each jurisdiction and the
approach, the culture, within the organization. And even if you were to
get all that right, it’s likely to change over time
so tax official behavior, I don’t think it’s fair
to say that it will remain constant over time. It might change. Different attitudes
might change over time. So the answer to these
questions is a real “not quite sure, it
depends” which is quite unsatisfactory. But when I look at the
case law, and this my 10-second look at the case
law, I’m finding that, and I’m going to skip this –
I’m just show this for the pictures, really. [Laughter] That’s
my favorite- [Laughter] When I look at the case
law, what I’m finding is – I think I’ll leave it on
the cat – what I’m finding is that judges, when
they’re considering taxpayer claims against
tax officials, tend to either accept the Chill
Factor Effect as a real phenomenon, and that’s
the more common outcome, without really subjecting
it to any real rigorous analysis, any rules of
evidence or any real lengthy discussion or,
equally, they might reject it out of hand, as well. And so what I’m thinking
that we might be creating here is a situation
of potential tax exceptionalism here,
treating tax officials in a special way, extending
their immunity, perhaps unnecessarily through
relying on a phenomenon which we’re not even
sure that it exists, we definitely don’t know
whether it exists in a tax context, and even if it
did, we’re not quite sure, it’s unlikely to be an
even phenomenon anyway. It might be more prevalent
in certain bases, with certain types of
officials, in certain actions. So all of that makes
me a little nervous. And so this is really what
I’ve come to in my paper. Oh. I’ve gone the wrong way. Hang on a moment. Just want to show you
the pictures again. There we go. Right. As I said, I don’t think
you can deal with these sorts of issues in a
scientific way, but I think, from the cases,
I’ve tried to extract little threads where
they’re there to give us some clues on how we might
deal with this in a little bit more nuanced way,
anyway, to try and ensure that we’re not
unnecessarily treating tax officials as “special”
through these fears. The first one is, perhaps
we can delineate between cases where individuals
might be potentially liable, personally, from
claims against the Revenue more generally. And the argument there
goes that, well, look, if it’s an individual – if
I, as an individual, am likely to wear the bill
if the claim proceeds and succeeds, then I’m, for
self preservation, I’m much more likely to act
over defensively in future when carrying out my role. On the other hand,
against the Revenue, big organization, opportunity
to, you know, spread the loss a little bit, maybe
it won’t filter down to the lower level employees,
or the people dealing with the taxpaying public,
so perhaps there’s less likely to be an over
defensive response and we mightn’t need to worry
about it as much. On the other hand, though,
I think that’s too general as well, because if you
think about it, when you look at the sorts of
claims where a tax official might be
personally liable, these are claims often that
involve really flagrant breaches of
taxpayer rights. Malice, recklessness. And perhaps, those things,
sure, you might act over defensively but in the
long run we want people to be fearful, or a tax
official to be fearful of behaving in such a
flagrantly offensive way. So, you know, that
argument could cut both ways. The second one, Chilling
Effects and Judicial Uncertainty, it’s just
a simple point that we, perhaps, where a judicial
outcome might create judicial uncertainty,
so, for example, where it might create a precedent
that goes well beyond established limits of
liability, or where there’s already an
existence of comprehensive code that that case seems
to go beyond, then perhaps we need to be particularly
mindful of over defensive responses. Because, remember, it’s
about over defensiveness, and over defensiveness
is far more likely where we’re unsure of things. So there’s uncertainty you
might go over the top in your response. So I think that’s
a valid one. The third one,
Policy/Operational Matters, I raised
that one because this policy/operational
distinction is a distinction that’s
familiar in all of the jurisdictions I’ve looked
at, as delineating where immunity from suit should
start and end for tax officials. So typically where tax
officials are dealing with policy and discretionary
matters, they should be immune from suit is the
view, whereas on the other hand, if they’re acting
operationally, you know, doing day to day
functioning in a commercial sense, well why
should they be afforded special protection any
more than a bank or an auditor in an
accounting firm. So, again, you can see
that could be a good delineation to use as to
when to give weight to these Chill
Factor concerns. And the other one, the
last point I’d make, is that in any event, even if
you are going to consider Chill Factor Effects, or
any public policy concern, I think you’ve got
to consider the countervailing benefits,
perhaps, particularly in the long run. So, for example, if
taxpayers have confidence that if their rights are
breached they have a real remedy, then, in the long
run, perhaps they’ll be more trusting of the
Revenue and more willing to comply. More likely to be friends. So, perhaps, at least when
we consider public policy effects like Chill Factor,
we need to consider the balancing those. I’m not seeing that in the
case law at the moment, so I think we could have
that situation of tax exceptionalism which
is unwarranted. Thank you. [Applause][Pause] PETER: John, thank you
very much for this very original approach
of the topic of tax exceptionalism. You know, after BEPS,
aggressive tax planning is more or less a taboo, but
you have shown that an aggressive attitude of a
tax advisor or taxpayer might pay off because, I
know you can doubt is it tax exceptionalism or is
it normal human behavior that tax authorities and
down, and that they are over defensive in
their reactions. But I think it’s something
we should take care of. Now, I give the floor
Alice and Richard for the final presentation. It’s a combined
presentation, so it will be very interactive. The floor is yours. [Pause] ALICE ABREU: Thank you,
Peter, and we have a really tough
act to follow. Not only were the
presentations that have preceded us really
interesting, but everybody had a really cool European
accent and we are here with the pedestrian
American accent. So, while we’re getting
set up, our task today is to talk about taxpayer
rights from an American perspective, and we
approach this from two different disciplines. I’m a tax person, and
Rick, who has long now been my collaborator as
well as my colleague, comes from jurisprudence,
and we have had a now long collaboration. We have, part of the work we’ve
done has dealt with tax exceptionalism and we
discuss tax exceptionalism as it applies to taxpayer
rights in the paper that is part of your materials
for the conference, and I also discussed it in 2015
at the first International Taxpayer Rights
Conference, but in the limited time that we have
today, we want to talk about another aspect of
taxpayer rights and we want to do that because
we think that there is an elephant in the room when
we talk about taxpayer rights, at least
from the U.S. perspective, and we think
it is time to identify and challenge that elephant,
so that’s what we’re intending to do today. The subject of taxpayer
rights in the U.S. has been a topic of
concern for at least 30 years and nobody has
championed it like Nina Olson has done. Nina was instrumental in
the IRS’s adoption of a Taxpayer Bill of Rights in
June of 2014, and at the first Taxpayer Rights
Conference in 2015, she took understandable and
very deserved pride in announcing that
legislation had been introduced to codify a
taxpayer bill of rights into the Internal
Revenue code. That happened. The codification is in
Section 7803(a)(3) which is now a part of the law,
and I would have expected that the combination of
the IRS’s adoption of the taxpayer bill of
rights followed by the codification into the
Internal Revenue code would have resulted in
lots of scholarly and administrative commentary
and a plethora of articles would have been written,
and yet, I think, the tax bar and tax practitioners
generally shrugged. And so the
question is why. Indeed, the day after
the IRS’s adoption of the Taxpayer Bill of Rights in
2014, there was one item published in Tax Notes,
which is required reading for all tax folks, and
everybody reads Tax Notes, and that item was an
anonymous and highly critical letter addressing
the question of the IRS’s adoption of a Taxpayer
Bill of Rights, and I want to discuss that letter
because I think that the criticisms it makes points
to that elephant and allows us to identify
and challenge it. So, the letter began by
claiming that the IRS’s adoption of a Taxpayer
Bill of Rights was, this is a quote: “No more than
a cynical move by the IRS to stave off further
regulation by Congress,” and the author of the
letter went on to say that “rights” are, like, not
really rights and put the word rights in quotes
because, he or she said, the fact of the matter
is that many of the enumerated rights are
not actually rights. The IRS is not compelled
to respect them, and the taxpayer has no legal
remedy when they are violated. The letter went on to
quote from Marbury vs. Madison, the iconic
Constitutional law case in the United States and
took umbrage that, in the letter’s words: “the
IRS Spin Doctor self congratulatory claims that
the IRS pronouncement is similar to the
Constitutional Bill of Rights,” and, you know,
one could dismiss that letter as just more of
the IRS bashing that has become all too common,
unfortunately, in the United States, but we
wanted to address it because we think that the
letter highlights what we think is the elephant in
the room as we discuss taxpayer rights, at
least from the U.S. perspective, and that is
the apparent absence of an enforcement mechanism,
of a mechanism for making claims, receiving
compensation, and, in some ways, operationalizing
taxpayer rights. We think that it is wrong
to say that the U.S.’s Taxpayer Bill of Rights
is mere window dressing, because it doesn’t seem
to provide affirmative mechanisms for
compensation and enforcement, and we want
to know why we think that’s wrong. RICHARD GREENSTEIN:
So, for purposes of this discussion, I want to
assume that there are no direct remedies available
in the Internal Revenue code or through doctrines
for enforcing the Taxpayer Bill of Rights that was
adopted by Congress, and the question, then, is:
if there are no or if at least it’s not clear that there are directly
available remedies for the failure of tax officials
to respect those rights, what is the value of a
Taxpayer Bill of Rights? Are they rights at all,
or are they, as Alice has wondered, simply
a window dressing. And I think one way of
getting a handle on this is to focus on what I
think of as a crisis of legitimacy in the tax
system in the United States. There are a number of,
what I believe are, deep sources of this
crisis of legitimacy. One is tax exceptionalism,
as Alice and I have argued in other papers. When you have this
prevalent notion that tax is somehow separate from
other fields of law, that it’s different, perhaps,
in kind from the rest of law, then many of the
things the tax authorities do, many of their
decisions, become obscure. They look mysterious
and they are potentially illegitimate, whereas
if you saw what they did through the lens of
ordinary principles of administrative law, that
is, if you know what they’re doing is just law
like any other field of administrative law, then
what the tax officials do would seem readily
explainable and justifiable. But I want to focus on
another source of this legitimacy crisis, and
this is, what I believe is the case, that the tax
system is not in the public’s mind in the
United States associated with principles
of justice. When the government places
burdens on citizens or persons generally that
come into contact with the government, those burdens
have to be perceived as just in order to be
seen as legitimate. But I think tax is
not perceived as just. It is not perceived as
substantively just because the relationship between
what the government takes in the form of taxes and
what it gives back in the form of the things of
value that are made possible by virtue
of taxation, that relationship between what
is taken and what is given is often obscure
in our tax system. Moreover, tax is not
perceived as procedurally just. The tax system, for many
taxpayers in the United States, feels remote. It feels arcane, it feels
oppressive, and it feels uncaring. The Taxpayer Bill of
Rights, as codified in the Internal Revenue Code,
responds to this issue of procedural justice,
procedural fairness, by explicitly using the
language of rights for the first time. Prior to the codification
of the Taxpayer Bill of Rights in the Internal
Revenue Code, there were certainly many obligations
placed on the Secretary of the Treasury and other
tax officials, but the language in the Code
that was the language of obligations, of duties. What has happened now with
the codification of the Taxpayer Bill of Rights
is those obligations and duties placed on tax
officials have now been translated into the
language of rights so that what was seen initially as
obligations are now seen as entitlements possessed
by the taxpayer. Moreover, the language of
rights has a particular resonance, a particular
significance, a particular meaning in United States
political culture, in that the language of rights
signals that these entitlements reflect
the demands of justice, specifically in this
case, procedural justice. When the language of
rights is used, it is clear that the source of
these rights is not in the positive law itself, but
rather lies outside the positive law, it lies
in justice itself. ALICE ABREU: But the
problem I have with that argument is, that it’s
still talking about words, and it’s just words and
I’m still left with nice words and claims of
justice but no actual ability to enforce them so
I’m still left with either window dressing or
lipstick or, you know, pick your metaphor. RICHARD GREENSTEIN:
Thi is fun. [Laughter] Words can have
practical significance. Words can have enormous
practical significance. In this case, what
is happening in the codification of the
Taxpayer Bill of Rights is actually the combination
of two different meanings. One, is the one I was
talking about a moment ago, the language of
rights and this notion of what we have in the
Taxpayer Bill of Rights are entitlements that have
their source in justice. But the fact that the form
of the Taxpayer Bill of Rights is now
codification, is now a statutory form, gives it
an important additional expressive meaning,
because now it becomes clear, because of the
legislative form, that the Taxpayer Bill of Rights
has the force of law; that they are legal rights. They’re not just moral
rights or rights emanating from justice, but they are
legal rights and so the law itself now stands
for procedural justice. And when you combine
those two things, when you combine the significance
of the language of rights with the expressive
meaning that flows from the form of codification,
then that creates a robust normative basis for
taxpayers to demand that those rights be
respected and enforced. The codification of the
Taxpayer Bill of Rights strengthens the taxpayer’s
position to insist that these demands of justice
actually be satisfied by the actions of government
officials and, that if they are not satisfied by
the actions of officials, that the law provide
remedies for their non-enforcement. ALICE ABREU: But that
raises an, two additional concerns, so if Taxpayer
Bill of Rights really does mean something and we can
overcoming the Chilling Factors – the Chill
Factors that John talked about, have we
perhaps gone too far? Because if it is the
status of taxpayer that then provides access
to all of these rights, doesn’t that mean
that that includes entities-corporations,
partnerships, Microsoft, Google, Intel, Apple-and
do they need rights? You know, the tax shelter
wars and the current issues of inversions and
similar things suggest that it isn’t those
taxpayers that need rights, in fact, it is
the tax system that needs protection from them. [Laughter] RICHARD GREENSTEIN: All
taxpayers, all taxpayers, are entitled to the rights
that are enumerated in the Taxpayer Bill of Rights. Remember, rights reflect
the demands of justice, and justice demands
equality in the treatment of taxpayers. The question, then, is
whether because taxpayers or tax entities of the
kind that you have been describing, have
particular wealth and particular power, whether
that power and wealth makes them unequal in some
way so that it is just to give them less protection
than ordinary taxpayers might get, so how
could that be? How would it be that
wealth and power makes it just to treat you less
aggressively with the protection – give you less
aggressive protection in terms of rights? Well, one possibility is
sort of that in principle, wealthy, powerful
taxpayers are less deserving of rights
because they are less vulnerable to being
treated wrongly by the tax officials, but that’s
clearly not true. I mean, Microsoft can be charged, given an inaccurate tax bill just as
easily as I can. But maybe it’s a
practical problem. Maybe the idea is that if
you have wealth and power, then you are in a better
position, because you have greater resources,
to protect yourself. In that sense, Microsoft
has an army of lawyers and others that it has, that
it can protect itself from maltreatment by
tax officials. But the problem there, it
seems to me, is that all taxpayers, including the
wealthy and the powerful, are vulnerable to changes
in their situation, in their position, and if
they lose their wealth, if they lose their power,
then they no longer have the resources to
protect themselves. The only way of ensuring
that all taxpayers are treated justly is
to aggressively, conscientiously protect
them fully with the rights enumerated in the
Taxpayer Bill of Rights. ALICE ABREU: Second issue
or potential over breadth, is that, again, if it
is just the status of taxpayer that is relevant,
we’re talking about the extra-territorial
application of law. It is well known
that the U.S. tax law does apply
extra-territorially, but is it really right to be
extending rights to folks whose only connection with
the United States might be an investment made
for pecuniary gain? Extra-territorial
application of law is the exception in the U.S., not
the rule, and so should we be extending that
exception to taxpayer rights? RICHARD GREENSTEIN: The
government should treat all who come into contact
with it with justice. I think it’s important
to keep in mind that the traditional rule against
the extra-territorial application of law was
developed to protect state sovereignty. The concern was that when
the United States projects its law beyond its borders
it interferes with the sovereignty of
other nations. But the United States does
not interfere with the sovereignty of other
nations when it extends procedural justice to the
citizens and the residents of those nations. ALICE ABREU: So conclude,
since we do have to do that, I want to
return to something that the Commissioner said
when the IRS adopted the Taxpayer Bill of
Rights in 2014. And what he said was that
he wanted to stress the importance of having
resources at the IRS to be able to conduct tax
administration in accordance with
taxpayer rights. And when I first heard
that, I confess, I sort of dismissed it as just
another example of the commissioners, you know,
perpetually, you know, begging Congress for
more money in the face of Congress’s continuing
defunding of the IRS, but, as I reflected on it
later, it seems to me that there’s a lot more to that
statement, and so that is what I want to talk about. It seems to me that in the
IRS’s own adoption of a Taxpayer Bill of Rights,
and the Commissioner’s discussion about
administering the tax system in accordance with
taxpayer rights, what the IRS is doing is, that the
IRS is taking upon itself the job of enforcing
taxpayer rights. Taxpayer rights then
become not something that is imposed on the IRS from
the outside, but something that the IRS is
undertaking as its job and its job to protect. And that brings us to a
subject that we haven’t talked much about yet, but
which I think is vitally important, and that is the
role of the Office of the National Taxpayer Advocate
in the U.S., and of ombuds in other systems. Because it is in those
offices that we see the agency itself standing for
the protection of taxpayer rights in the U.S. – the National Taxpayer
Advocate, and her offices, the Taxpayer Advocate
Service, acts in a way as representatives
of taxpayers. They don’t act as taxpayer
counsel, but they perform many of the services of
counsel in representing the taxpayers when there
are problems with the IRS. So, in other words, the
Taxpayer Advocate Service gives the Taxpayer Bill
of Rights teeth, and those teeth, I think, have been
sharpened substantially very recently in Nina’s
2016 annual report, which is three volumes this
year, and I highly recommend – it’s
good reading. But one of the things that
she does this year, which is vitally important, is
that she has a taxpayer rights assessment, that is
a report card of how the IRS is doing in respecting
taxpayer rights, and that will become a standard
feature of the report going forward. In addition, in
identifying the 20 most serious problems that face
taxpayers, for each of those the report
identifies which taxpayer rights are implicated
by those problems. And that, it leads me
to conclude with an observation of sort of the
overriding import of the Taxpayer Bill of Rights
and the work of the National Taxpayer Advocate
and her office, and that is that it’s a concrete
expression of the importance of tax
administration to the working of the tax law. It is a concrete reflection
of you know, the maxim that procedure is
substance, and if that’s right, and I think it is,
I think I want to leave, at least the academics
in the audience, with a challenge. If that’s right we need to
start thinking about how we convey that procedure
as substance when we teach the substance
of the tax law. Thank you very much. [Applause] PETER: Alice and Richard,
thank you very much for this overview of the
pros and cons of the U.S. situation with Taxpayer
Bill of Rights. It brings me to the
question what was the influence of the new
administration in U.S. on this topic, and
especially the influence of your new president. Of course, he might have
some personal experiences with the IRS. Well, this opens
the debate. We can have some
questions and statements. We have 15 minutes
for debate. Please mention first your
name, and then we will start the answering. Who would like to start? Is there a microphone? [Pause] ERIC: Hi. My name is Eric
[Unintelligible]. I come from Johannesburg,
South Africa, Office of the Tax Ombud. I just want to
ask one thing. Who’s responsibility, at
the end of the day, is it to ensure that the rights
of taxpayers are put up there? Is it the revenue
authority or is it the ombud or taxpayer
advocate, whichever way? PETER: Thank you. We’ll take a couple
of questions. The gentleman
on the right. HANK ALFORS: Thank you. I’m Hank Alfors
[Phonetic], and I’m a criminologist
from Amsterdam. Criminologists are
interested in dark numbers, that is those
crimes that we don’t know that exist, the police are
[Unintelligible] of some, but not all. And in this context of
this admirable panel today, I’m interested
in the dark numbers of complaints of taxpayers
that we don’t know. Elaine Benn told us
that there were 18,000 complaints in the UK,
which is incredibly low, much better than Marks &
Spencer’s did, I’m sure. [Laughter] And that brings up the
topic, is the tax law or the tax bill of rights
not something for tax professions instead
of taxpayers, how many taxpayers are really
aware, especially individual taxpayers, are
really aware of the rights specified in the charter
or a bill and how often will they invoke
these rights? My guess is that a large
majority, let’s say 90% of all complaints, is never
being imagined by the taxpayers as having to do
with a bill of rights at all. PETER: Thank you. Nina? NINA: I think the panel
was just absolutely wonderful. I thought I would just
talk a second about the experience of trying to
get the IRS to adopt the Taxpayer Bill of Rights,
and what I had envisioned might transpire. The way I got the IRS to
adopt it was to say it didn’t create any new
remedies that weren’t otherwise in the law,
so it wasn’t like our Constitution, which is
– and the Bill of Rights there, which is basically
self standing and self executing in a way. It grants you
these rights. To Hank’s point, we had
done a survey that showed that only about
47% of U.S. taxpayers thought that
they had rights before the IRS and only 11% knew of
what rights they were. And so I thought if we put
this in a very clear way they could at least
understand, generally, that there were rights, and
then, what we did with those rights, was we
linked them, and you can go to our website, the
taxpayeradvocate.irs.gov to see how the
specific statutory, or administrative
protections, the specific remedies falling under
each one of the 10 rights. But then, Congress
intervened, which was my secret strategy, to
actually, you know, put it into the Internal Revenue
code, and charge the Commissioner with ensuring
that IRS employees protected those rights. A side issue was when it
was just adopted by the IRS. I, and my staff, used
the words, in certain conversations, this is a
violation of the right to a fair and just
tax system. And the IRS would come
back and say it’s not the law, therefore, it’s
not a violation. So we came up with the
thesaurus of words that we were able to use, like
it’s an infringement. It’s an impingement. It’s all sorts of
stuff, but we didn’t say violation. And then, on December of
2015, we started to be able to say this is
a violation of law. And I think that brings
the next phase in my stealth strategy
in the U.S. system, which is the
courts, and this goes to John’s point, that we’re
a common law system, so we now have, in the law
– in the law – these provisions, and the courts
can, then, take those provisions and as
situations are presented to them they can say what
the IRS did here is a violation of the right to
be informed; a violation to the right to
quality service. And that, in itself,
creates a precedent that can be built upon in the
next case and the next case, so that over time
we can have development of what actually the right
to quality service means. PETER: Thank you. I’ll take one more comment
from the left side. LORTA: Thank you so much
for very exciting panel. My name is Lorta Bierton
Larsson [Phonetic], I’m yet another academic, and
I’ve been studying Swedish tax agency, and I
particularly like that Elaine Benn, when you
said that the practices we apply within the HRMC, and
I would like to ask you, and perhaps also to Nina,
is that changing the tax, well, revenue collector
employees’ view somehow to treat taxpayers. What was the biggest
challenge in practice, so to say? PETER: Okay. Thank you very much. Let’s start with the
first question, whose responsibility is it to
take care of the rights and obligations
of taxpayers? Alice? ALICE ABREU: Well, I want
to suggest an equation that comes to me from the
work that Rick and I have done, and that equation
to me is that you need two things to come together,
and if you put together the language of rights
with a codification, the legislative imprimatur,
the combination of those two things, I think,
create – or we think, create a powerful
normative basis for enforcement, and we
believe said that the combination sets up the
kind of normative basis that I think courts would
be able to build from. RICHARD GREENSTEIN: Yes,
I would just add to that, that it seems to me that
the form in which the Taxpayer Bill of Rights
appears is critical. When the IRS, in 2014,
adopted it – adopted the Taxpayer Bill of Rights,
it expressed a commitment on the part of the IRS
to respect those rights. But when that same
language was codified, became part of the
Internal Revenue Code, it gave it the force of law
in exactly the way that Nina was
describing earlier. I would just add, by the
way, to her comment about the Bill of Rights
in the United States Constitution, one of the
great debates in American Constitutional theory is
whether the Bill of Rights creates rights, grants
rights, or is simply the enumeration of rights
that existed prior to the Constitution itself; that
is to say, to use language from another era, natural
rights, rights rooted in justice, as is probably
obvious, my own view of the matter veers more
toward the notion that the source of these rights are
justice, and I think the same is true of the
Taxpayer Bill of Rights. I think the source of
those rights is not in the codification itself,
but rather in justice. PETER: Thank you. Then we had a comment
on the dark number of complaints – anonymous
taxpayers who do have very bad experiences, but how
to make sure that they can benefit from
these charters. Elaine. ELAINE BENN: Thank you. Hank, yes. I would agree with you and
I would say that’s, you know, 98% of, you know,
the customers who are dissatisfied in some way,
would probably not go down the route of pursuing
a formal complaint. So when I talked about
our refreshed complaint’s ambition the charter kind
of helped us develop, that was why we focused in on
the sources of learning, so what is it that
drives those complaints? What are the customer pain
points, the things that really drive people
who do feel so annoyed, irritated, desperate, that
they go down the route of making a complain, because
most people don’t, you know, and the British, we
tend not to complain too much, so you know, we kind
of, our nature is to sort of just let it ride,
generally speaking. So we recognize that what
we had to do was to really get under the skin of the
things that people were complaining about and get
to the root cause and fix those things
in our systems. And that might be guidance
and advice which people couldn’t understand. It might be that our
processes were really perverse and that
different parts of our system didn’t speak to one
another, a whole range of complaints. That’s why I knew
complaint’s ambition was pushed through every area
of our organization that a source of a complaint is
a true source of learning and you have to act on
it, and really respond to that, the root cause. IAN YOUNG: Just
to say one thing. I think my dad was a
serial complainer, and I learned at his knees, and
I’ve become a bit of a complainer myself, so my
wife thinks I’m a bit of a nut case, but and that’s
probably why I got in Taxpayer Charter work. But I do think it’s – and
the UK experience has been up and down, and even in
the last 10 years it’s been up and down. And I’ve had – not with
Elaine – but I’ve had terrible arguments with
the senior people in HMRC about things which I
thought they had nonsense beliefs about what a
charter was all about. And you have to fight your
corner, I think, and I think it’s a matter,
in answer to the South African query, I think
it’s, because as I mentioned in my presentation, it’s
about – it’s a joint effort. I don’t think any one side
can be the guardian of the purity of
taxpayers’ rights. It’s a matter of the
authority being committed to doing it and there
being mechanisms within the system to ensure that
people have a legitimate and easy operable means of
complaining and that there are people like ombudsmen
who will pick up the challenge if it’s serious
enough to be pursued. So I think it’s
a joint effort. It’s not easy and, in
the UK, it’s okay at the moment. I think the one thing that
has changed, I think, in the UK in the last two
years, is that it’s become a really important
critical element of the way HMRC sees itself as
performing in terms of running the tax system,
and it’s been – there is an absolute positive
commitment at the center of HMRC at the right,
the top level, as Elaine mentioned, and the charter
committee is now one of only four subcommittees
of the board of HMRC. It’s really central to
what they do, how they see themselves performing, and
carrying out their duties, one of which is to
uphold the rights of the taxpayer. Without that commitment,
which we didn’t have before, I was up and down
for many years in terms of trying to get it to
work sensibly and in a practical point of view,
so and people don’t, generally speaking, don’t
– they don’t like to engage with the tax system
unless they have to, so in theory, everybody ought
to know that there’s a taxpayer’s charter and
be, you know, minded to exercise their rights
under that charter. In practice, they don’t
want to get engaged with the tax system unless they
have to, and then they need to have an easy way
to do so, which will sort of address their issues in
a way which is practical, simple, straightforward,
and they come across a tax authority which is
listening to what they have to say, and if
they’ve got a legitimate complaint, is seriously
going to do something to correct it and
make it right. But that’s not easy. And in some jurisdictions
you do it by law, in other jurisdictions you do it by
behaviors and charters and whatever so that, you
know, there isn’t one size fits all for all the
world’s countries I’m afraid. And it’s all hard
work, quite honestly. It’s not an easy task. PETER: In any case, people
should feel protected, but if they have a complaint
that they can put this complaint on the table
without being challenged for other things and I
think that’s also very important issue. Last comment was: what are
the biggest problems in the U.S. with respect to the
charter you faced, and of course, we all want
to learn from your experiences. Can you reflect on this? What was the biggest
challenge, or still is? ALICE ABREU: [sigh] Boy,
that’s tough. You know, the annual
report was 20, top 20 problems facing taxpayers
and so my instinct is really to cede the floor
to Nina, who’s in a much better position to
answer that than we are. But I think that one
significant problem really is getting the word out
to the rank and file tax practitioners about the
existence of taxpayer rights and promulgating
the notion that taxpayers do have rights. Nina talked about the
report that, showing that so relatively few people knew
of taxpayer rights, and I think that that’s a
significant challenge. Because if you don’t know
that you have rights you can’t even begin to think
about enforcing them, and that’s one of the reasons
that I think that those of us who are academics
really need to begin to step up and begin to
consider issues of taxpayer rights as issues
of the substance of taxation that we need to
convey to our students as we try to teach them
about the tax system. RICHARD GREENSTEIN: This
is a little abstract, but I think a big
problem is cultural. You know, the United
States came into being in significant part as a
revolt against the, what was perceived, as unfair
taxation, so the idea that tax is a suspicious
activity, taxation is a suspicious activity, is
deeply rooted in American culture, and I think
it accounts, to a great extent, for the crisis
of legitimacy and the disconnect between
taxation and justice that we were talking
about earlier. PETER: Thank
you very much. We’d like to conclude this
first panel, and now it’s coffee time, but not
before having thanked my fellow panelists for all
your preparations and beautiful presentations,
and please show your appreciation. [Applause]

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