TAX AND THE TAXPAYER VOLUNTARY REPORTING NITA 2018

TAX AND THE TAXPAYER VOLUNTARY REPORTING NITA 2018 Cushman

Goal for Today We are going to learn: What exactly is voluntary reporting. How to leverage voluntary reporting (make it work for you. )

True Fact Tax administration and tax collection is scientific. It is evidence based. Tax administrators make decisions based on data, and on human psychology.

If taxation is scientific…. This means that tax administration is not guesswork! Tax administrators need to know what works and what doesn’t work. Sneak peek Education works. Enforcement works. And education is often less expensive than enforcement.

What is voluntary reporting? There are two basic systems of tax administration Billing and invoicing. �We see this system in property tax. This requires a ton of upfront information about the taxpayer or the taxable event. Voluntary reporting. � We see this system in many sales and excise taxes. This is a system for taxpayers to identify themselves (self identify) and come forward to comply with the law.

Five Objectives - Tax Administrators strive to make sure: Filing is easy. Paying is convenient. Tax obligations are understandable. Systems are in place to detect and respond to noncompliance Assistance is available.

Voluntary Reporting Myth. Buster It’s not really “voluntary. ” There is a consequence for not complying. The tax administrator uses tactics to urge/convince/motivate the taxpayer to comply with the law. And the best part If done right, Taxpayers do a lot of our work under this system.

Duty to Know the Law In the voluntary reporting system it is the taxpayer’s duty to know the requirements of the law. The crux is how to find the taxpayer, and how to find them early on before they are out of bounds. You might have some knowledge, as in a permit to harvest or you require a business license (these are “hooks”) or You might not be aware of the taxpayer at all, you only are aware that taxable activities are likely taking place.

5 Examples of Voluntary Reporting Personal federal Income tax General business and occupation tax Use tax Sales tax Forest excise tax

Examples of taxable activities Vendors on reservation UPS/Fed Ex Deliveries Fish Buyers Internet providers Transmission towers and infrastructure Tow trucks Amazon deliveries Ice sales Bounce House Set Up Moving company Cattle feeding Custom Kill Office support Janitor services Mobile pet grooming Landscaping Food Carts

An Effective Voluntary Reporting System Would…. Give plenty of notice. Educate. Be fair. Include due process. Be legitimate (authority is credible and respected) Responsive. Have a rational enforcement framework. Have Jurisdiction squared away.

Effective Taxpayer Contact Changes behavior, so… To do this it has to reach the taxpayer. An effective strategy would include: A documented plan. Consistency in messaging. Escalation tactics. Monitoring. Flexibility (willingness to adapt to new information)

Latin Phrase for the Day! Nihil de nobis, sine nobis. Not about us without us. In other words, tax administrators are going to be hard pressed to maintain a cost- effective and productive tax program unless taxpayers are looped in from the start.