Another price to pay for very high penalties is that their imposition may well be unfair.118 Punishments, if disproportionate to the crime, would also be unjust. They would be unfair in their application if they reached only a small number of offenders, as offenders who have been arrested would be much worse off than those who have not.119 In tax administrations prone to corruption (including accepting bribes and using administrative powers against political opponents of the regime), Existence is excessively strict, but sanctions that are not universally enforced can be a dangerous weapon in the hands of corrupt officials. The general conclusion is that it is better to impose moderate sanctions more often for non-compliance than to impose draconian sanctions that are rarely applied. 14. A client of a registered agent (RA) is an individual seeking assistance with a proposed penalty. Which of the following methods constitutes a challenge to the penalty? Which of the following statements is correct regarding the CDP`s request for a hearing, which makes arguments that were previously considered frivolous? One of the frequently repeated dogmas of tax administration is that « legal simplification » also reduces the cost of compliance by taxpayers.81 A simple tax law can meet the dual requirement of ease to follow and difficult to ignore, as it makes it easier for both the taxpayer or the taxpayer`s intermediary to know what is expected of him. and the manipulability of the law. This reduces opportunities for tax avoidance.82 The complexity and ability to avoid tax liabilities can come from several sources. Inconsistencies in the scope of the law can certainly be one of them. Exceptions or special arrangements that provide for lower obligations in certain circumstances not only increase complexity, but also encourage taxpayers to try to adapt to those circumstances. Conversely, the more special circumstances taxpayers with increased obligations have, the more those circumstances are avoided.
However, when considering the political justifications for certain taxes, simplifying legislation may not be a very easy task. In addition to their deterrent component, sanctions can also have a significant financial component. Financial penalties can increase revenues, while jail sentences can increase expenses. Monetary penalties can even be designed to cover the costs incurred by the tax administration in pursuing a case from investigation to final recovery. Fines can also be used to reduce administrative costs by encouraging the early resolution of disputes between the administration and taxpayers.87 This principle may seem obvious. However, there are a number of countries, particularly in transition countries, where the principle is not respected under applicable law.88 In the United States, for example, each audit is followed by a written report [called Revenue Agent`s Report or RAR] on proposed changes to the taxpayer`s tax return, including explanations. See Internal Revenue Manual 4237, Report Writing Guide for Income Tax Examination Officers § 231, MT 4237-17 (23 April 1987) (background report), cited in Michael I. Saltzman, IRS Practice and Procedure ¶ 8.06[8] n.121 (2nd edition 1991). Such a report is beneficial for both the taxpayer and the tax administration. If the matter is not resolved, the Appeals Office prepares a memorandum in which its decision is discussed. No.
¶ 9.05[3]. The taxpayer may obtain a copy of this note in accordance with the Freedom of Information Act. Ibid. n.5. The government should seek outside input and a wide range of opinions by holding public hearings on proposed regulations. Individuals may testify orally or in writing. The ability for all parties to be heard will help the government uncover any unintended benefits or difficulties it proposes to bring. In some countries, hearings are prescribed by an Administrative Procedure Act.18 In the absence of a similar law, the matter may be specifically regulated by the Tax Administration Act. In the case of additional civil penalties for the most heinous activities of tax evasion, the additional purpose of the penalty comes into play. The level of such penalties should initially be based on the legal traditions of punishment deemed desirable in the jurisdiction concerned.
However, this starting point should be adapted to take account of the negative effects of the particularly high sanctions mentioned above. However, a civil penalty for fraud is unlikely to exceed 100% of the amount of the insufficient payment.137 If a dispute persists, the taxpayer should be able to appeal to a special administrative appeal body within a prescribed time frame. In order to ensure impartiality, this unit should be completely independent of other departments of the tax administration. It could report to someone outside the tax administration, perhaps the general counsel of the Treasury.37 GAAP — Generally accepted accounting principles are the rules and practices to be followed when maintaining financial records and accounting records. PROFIT, CAPITAL — See: Capital gain GEARING — Term widely used in relation to a company`s leverage ratio. A company is highly concentrated when the debt-to-equity ratio is high. Sometimes referred to as capital debt or leverage. COMPLEMENTARY – In a partnership, a partner whose liability is not limited. All shareholders of an ordinary business corporation are general partners. A limited partnership must have at least one general partner and at least one limited partner.
PARTNERSHIP — See: PARTNERSHIP – SKIPPED GENERATIONS TAX — Tax levied to prevent tax evasion of transfer taxes (i.e. inheritance tax and gift tax) on successive generations. GIFT CAUSA MORTIS – A transfer of ownership by a person facing imminent death. The donee thus becomes the owner of the property, but on condition that the donation is revoked if the donor does not die. GIFT BETWEEN LIVING PERSONS – Free transfer of property during the lifetime of the transferor (donor). In many countries, the free transfer of property is subject to gift tax. GLOBAL FORMULA ALLOCATION METHOD — See: Global method GLOBAL COVERAGE — A risk management strategy to balance the positions of different business units or with independent third parties. GLOBAL INCOME TAX – An income tax that aggregates income from all sources at the individual (or family unit) level. The income is then taxed at a single progressive rate. AGGREGATE METHOD – The aggregate method does not calculate the profits of each member of a multinational corporation (MNE) on the basis of arm`s length transactions, but allocates the total profit of the corporation to the members of the multinational corporation based on, for example, the turnover of each member, the expenses incurred by each member or the labour costs of each member. GLOBAL TRADE — A term used to describe transactions carried out, among others, by investment banks and securities dealers in relation to financial instruments, financial services and financial assets. Also known as 24-hour trading, as trades are carried out continuously for one day in financial markets around the world.
GOING CONCERN – A business that is actually in business, such as at the time of acquisition. The benefit of acquiring a business as a business in operation (if it operates profitably) is usually captured by a payment for goodwill and other assets. GOSHE VALUE – The element of value that connects ownership due to the ability of a business or business to continue working and generating income after a transfer of ownership. GOOD FAITH – « Good faith » refers to a state of mind in which a person honestly and sincerely believes that certain facts or circumstances are what they are saying. PRODUCT AND SALES TAX – Multi-level sales tax levied on purchases (and the tenant). Sellers (and landlords) are usually responsible for moving in. LANDING COSTS – a term used in connection with the importation of goods, i.e. the sum of the cost of the goods in question, the amount of customs duties levied on those goods and the cost of unloading them. LAST IN, FIRST OUT — See: LIFO LEASE — Generally, a lease is a contract for real estate or personal property in which the owner of the property grants another person the right to own, use and enjoy the property for a period of time in exchange for regular payments. LEASEBACK — See: Sale and leaseback LEGAL ENTITY — In general, corporations, corporations and limited liability companies for tax purposes are considered to exist separately from their shareholders.