an individual faced with a request from an authority with enforcement capacity

An individual faced with a request from an authority

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an individual faced with a request from an authority with enforcement capacity becomes blurred. In such circumstances, individuals may have no choice but to meet the request, and if they do have choice, they are likely to have a vested interest in keeping their non-compliance out of the view of the authority. Whether
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Tax System Integrity and Compliance 275 or not they acknowledge non-compliance to others or even themselves will depend on contextual and individual factors. The social process of finding justifications for non-compliance through searching for legal loopholes or proclaiming ignorance complicates the picture even further (see McBarnet, Chapter11, this volume). Assessing, even defining compliance, slips further from reach. Difficulties of this kind are common to all compliance research. In the domain of taxation, a third problem warrants serious consideration: Are individuals aware that a direct request to follow tax law has been made to them, and do they have sufficient legal literacy to understand the request? As the law becomes more and more complicated, and as taxpayers turn to tax agents to do their tax for them (77% of Australians use a tax agent (Australian Taxation Office, 2002)), questions can be raised justifiably as to whether or not individuals are aware of their tax obligations (Coleman and Freeman, 1997; Inglis, 2002). Thus, in the area of the payment of income tax by the ordinary taxpayer, we might ask, are the requests received by the taxpayer, is attention paid to such requests, and if so, are the requests understood and remembered for future reference? This complexity in defining and assessing compliance is represented diagrammatically below. For the moment, let us put to one side the fact that an authority does not issue one request but many, and that there may be third parties such as tax agents who moderate the relationship. In spite of the fact that the elements of compliance that remain in Figure 13.1 represent a simplified regulator- regulatee exchange, the diagram serves the purpose of uncovering the changing face of compliance across a complex set of enmeshed institutions that comprise a tax authority. In the process, insight can be gained into how the pursuit of compliance outcomes in different parts of the organisation can instigate responses within the tax authority and within government that may erode the integrity of the tax system overall. Figure 13.1 represents compliance outcomes from the perspective of the regulator and the perspective of the regulatee. Behind each perspective is a culture relating to tax collection and taxpaying. The degree to which these cultures are compatible reflects the quality of the dialogue that has taken place between government, tax authorities and citizens. These cultures can comfortably coexist, or they can be sites of serious conflict, depending on circumstances. Periods of social change and tax reform define occasions when dialogue about the tax system needs to take place in a way that is inclusive of all interest groups, not just those elites who appreciate the finer details of tax law and tax administration. At
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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