Five Key Things Non-Tax- Administrators Should Know about Tax Administration and Its Policy Implications

1
Five Key Things Non-Tax- Administrators Should
Know about Tax Administration and Its Policy
Implications

• Harley Duncan
• Federation of Tax Administrators
• September 29, 2006

2
5 Key Things Overview

• TA is responsible for compliance continuum
• TA necessarily involves line drawing
• TA has responsibility to protect the public fisc
• TA has a policy role with respect to the tax
  system
• TA respects processes

3
Compliance Continuum

• Runs gamut from voluntary compliance to enforced
  compliance
• Requires active involvement in tax law
  formulation and implementation
• Emphasis on simplicity, clarity
• Emphasis on availability of information to and
  from relevant parties
• Requires adequate tools -- authority, verifiable
  records, penalties, etc.
• Clear law decreases intrusiveness of TA and
  improves voluntary compliance

4
Line Drawing

• TA involves interpretation, judgments and
  translation from general to specific
• Based to extent possible on expressed intent,
  precedent and common understandings
• Any line creates aggrieved parties
• Established processes for dealing with grievances

5
Protection of the Fisc

• Probably most misunderstood or under-appreciated
  role
• Interpretations/judgments will favor taxation and
  disfavor preference
• System of voluntary compliance/self-rendering
  requires same
• General public not capable of prosecuting case
  that law is being misapplied
• Adds stress to the system that needs to be
  understood

6
Policy Role

• Not policy eunuchs -- In most states, TA is
  primary executive branch policy adviser
• May have a perception as a partisan role, but
  data and analysis should be open to all
• Policy preferences to maximum extent should be
  principle-based

7
Respect for Processes

• Involves disputes, guidance and other matters of
  interpretation and application
• Established processes should ensure full
  consideration of facts, understanding of
  precedents and necessary interrelationships
• Insures consistent application across taxpayers

8
Policy Implications

• Clarity, simplicity and consideration of
  enforcement will reduce intrusiveness
• Argues for involvement/consideration of TA
  throughout policy development
• Will be stress in the system and some adversarial
  matters
• Cooperation can minimize stress
• Nature of system requires quick and fair
  adjudication processes