The sudden move to remote work has been one of the biggest shifts for the world’s tax authorities, including those from the UK, US and Australia with whom we spoke, who have been successfully operating with most staff working from home. The same appears to be true for other tax authorities that have previously digitalized aspects of their tax systems. However, tax authorities in some developing countries like India and Indonesia face greater challenges in implementing a remote workforce.
From an audit perspective, tax authorities have responded differently. With companies in “survival mode” and physical interactions like onsite visits and in-person meetings not possible, some tax authorities, such as Brazil’s, have temporarily suspended audit, enforcement and collections activity. The US Internal Revenue Service has continued those examinations which had started, but is not beginning new audits until at least mid-July 2020, although pre-audit case development is proceeding. The Australian Tax Office gave large corporate taxpayers the option to put ongoing audits on hold, yet the majority of companies opted to proceed which may suggest that companies do not want to delay the audits, as they seek to gain tax certainty. By contrast, regular audit activity continues for tax authorities in Mexico, Chile and Peru.
From the taxpayers’ perspective, dealings with tax authorities whose professionals are working remotely seem to remain effective. We polled over 425 tax and business leaders during our webcast and 56 percent of those in the midst of a tax authority examination responded that “the matter is proceeding well”. Only 22 percent reported “difficulty contacting or communicating with agents”. About the same number reported “problems getting information to respond to information requests”.
Many of the efficiencies gained from working remotely could endure. While in-person meetings will likely remain a feature of future tax authority examinations and negotiations, many jurisdictions are amending their processes to eliminate formal hard-copy document requirements, though it is unclear which of these new processes will become permanent. The OECD’s Forum on Tax Administration (FTA) has played a key role in allowing the revenue authorities to “meet” and leverage each other's experiences, as revenue authorities work through this difficult environment. The FTA’s Mutual Agreement Procedure (MAP) Forum, which is devoted to improving MAPs globally, is collecting and sharing such new leading practices through virtual FTA meetings and a centralized database of program improvements accessible to all FTA members.