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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