Under a significant change in the taxation system in Pakistan, the Federal Board of Revenue (FBR) has been under a review by Federal Tax Ombudsman (FTO) due to the alleged negligence in responding to the request of tax-payers to have their time to file income tax returns extended. This move underscores the fact that taxpayers are still out of touch with the systems that are supposed to support them and particularly the IRIS online portal.
What was the basis of the Investigation?
A public interest complaint, filed by a tax lawyer Waheed Shahzad Butt led to the investigation. The complaint raised some grave issues, the main ones are:
•Those taxpayers who had applied extensions to the IRIS before the deadline were not responded to.
• Several extensions applications were held in the outbox of the portal, which points to technical issues or lack of care.
The result of the inaction was to place the taxpayers in a confused, unguarded and vulnerable position in respect of undeserved penalties.
These aspects highlighted inefficiencies in the system as well as a possible maladministration in the FBR.
FTO Summons FBR Officials
In a bid to curb the situation, the FTO has summoned top FBR officials to clarify why they have not done anything. The officials who were summoned are:
• Member Operations
• Member IR‑Policy
• Director General (Emerging Technologies)
They are requested to clarify:
• Reasons why extension requests were not done.
Why taxpayers were not responded to even after submitting in time.
• It depends on whether the system flaws or administrative negligence have been the cause.
This action shows that the FTO is determined to hold people to account.
Why the Problem is Important to Taxpayers.
The incapability to handle extension requests is critical to taxpayers in Pakistan:
Loss of Trust
Taxpayers feel neglected and unjustly treated when a digital system collapses and no one is responding to their requests.
Increased Risk of Penalties
The failure to consider the extension applications places the taxpayers in the risk of incurring fines despite meeting the due date.
Breach of Taxpayer Rights.
Taxpayers are entitled to fair treatment, responsive system, and efficient system. The administrative silence defeats all the three.
Need for Systemic Reforms
This case shows that there is an urgent need to enhance the digital infrastructure and administrative efficiency of the FBR.
The Wider Protection of Taxpayers by FTO.
The FTO has been known to intervene when the tax system has failed citizens. Past interventions include:
• Will not impose fines on businesses when filing delays were brought by problems with systems.
• Commissioning the betterment of taxpayer helpline services.
• Raising awareness of recurrent inefficiencies in digital filing systems.
This is the new inquiry that carries forward the mandate of the FTO to protect the rights of taxpayers as well as to hold them to account.
Potential Results of the Investigation.
According to the findings, there are a number of outcomes that can take place:
Administrative Corrective Measures.
The FBR may need to seal the procedural loopholes and appropriately attend to all pending applications.
System Improvements in IRIS
The technical teams can be assigned to correct the Outbox problem and improve the monitoring of extension requests.
Policy Recommendations
The FTO may suggest the removal of complexities in the process of granting extensions and making it more standard.
Enhanced Taxpayer Protection.
The case may result in improved protection in which taxpayers will not suffer because of the failure of the system.
Conclusion: The Case of Climate in the Fair Tax Administration.
The move by the FTO to probe into the FBR lack of action is a necessary step towards making the tax system in Pakistan transparent, accountable, and friendly to the taxpayers. This development is a hope to individuals and businesses that depend on timely extensions as these issues will be addressed finally.
This case is a reminder that efficient tax system should not only impose the taxes but also help the taxpayers with effective and efficient taxation systems that should be responsive and reliable. To learn more FTO Orders Probe into FBR and seek the services of a law and right tax advisor regarding other US Tax Laws, pay us a visit: Apnaqanoon.
