large corporation which has escalated this far up the pyramid will be

Large corporation which has escalated this far up the

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large corporation which has escalated this far up the pyramid will be vulnerable somewhere in its complex of activities to false and misleading statements having been made, among other vulnerabilities. In part, this view on tough enforcement may itself stem from a perceived lack of support from ATO managers, the ATO itself and even the Director of Public Prosecutions. The use of a litigation task force could help crystallise this support and more tangibly signal to the staff and the taxpayer involved that swift and sharp enforcement will be taken. The next rung in the compliance pyramid will be assessments/penalties that trigger litigation by the taxpayer and/or prosecution by the Director of Public Prosecutions (see Figure 9.4). The final rung of the compliance pyramid could be referral to the National Crime Authority (NCA). 6 This occurs rarely at the moment, a situation that should continue. The NCA’s superior powers and criminal enforcement capabilities should not be employed even on the most hardened criminals, but only on uncooperative hardened criminals who are believed to be major tax evaders. The pyramid in Figure 9.4 is an illustrative pyramid that may be useful in navigating the compliance options available in large business compliance at this point in time. No compliance pyramid can be effective without changing over time, with context, and in response to research findings from evidence-based risk leveraging. Nor should this compliance pyramid, or any other, be prescriptive. They are no more than a guide to compliance decisions that should never be allowed to trump contextual wisdom. It should never be a criticism of an officer that they are not following the ATO pyramid. It should be cause for praise when the idea of the pyramid is used flexibly to display an utterly original array of innovative risk leveraging strategies through which the ATO might escalate in dealing with a tough case (as Job and Honaker, Chapter 6, and Hobson, Chapter 7, argue in this volume). Rather than slavish implementation of ‘the Model’ we should want success stories of innovation in pyramidal thinking about leveraging compliance. By thinking pyramidally about the enforcement options available, the tax officer engenders confidence and motivates cooperative compliance through
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198 Taxing Democracy showing a willingness to escalate up the pyramid. A regulator who believes that her pyramid is credible and who is willing to escalate up it if necessary rarely actually finds it necessary to escalate far up the pyramid. Confidence about the authority of the pyramid of enforcement capabilities projects an image of invincibility to the corporation that is the subject of tough enforcement. This rarely fails to engender cooperative compliance at low levels of the pyramid, enabling de-escalation to even lower levels. The effective regulator is cooperative and trusting at first, tough if that trust is abused, tougher and tougher if it is still abused, but forgiving if trust and cooperation is finally restored (Ayres and Braithwaite, 1992, Chapter 2). It does not matter that escalation at lower levels of
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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