Victor Jaramillo Discusses Developments in Tax Administrations and Their Approach to Tax Controversy Compliance

Tax administrations world- wide have become increasingly aggressive in their tax assessing and information seeking positions. This has evolved over many years. The visible evidence on a global basis is the OECD initiatives sponsored by the G20 and a number of influential international organisations and the EU steps to counter tax evasion and tax avoidance (which used to be a good thing) and the new proposals designed to lead the way in dispute resolution. In varying degrees, tax administrations seem determined to take taxpayers to task, even in situations where the resulting litigation can be considered to be lacking in ethical foundation and/or almost frivolous. This carries over on the administrative side to fewer rulings with those issued being much more specific in application and in broader exercise of discretion by tax administrations in assessing and administration of domestic tax laws. Tax administrations are also, some more and some less, ramping up numbers and imposing explicit or implicit assessment quotas on auditors with the result that settlement negotiations with taxpayers have become much more challenging and less likely to produce reasonable results. In some cases, new administrative practices are supported by legislation. Bottom line – taxpayers can no longer count on achieving a settlement of a controversial issue – outside specific programs directed to recovery of legacy assets and offshore funds. The panel will discuss the developments they have witnessed, also in some cases reflected in jurisprudence, where laws and administrative fiat have been extensively revisited by tax administrations, with adverse impact to taxpayer rights.