Background and goals of the investigation

The Norwegian Tax Administration shall ensure the correct determination and collection of the direct and indirect taxes as decided by the Storting. Complete and correct basic data is crucial to the quality of the pre-completed tax returns for wage earners, pensioners and businesspersons. Weaknesses in the Norwegian Tax Administration’s control of basic data and tax returns can result in incorrect determination of taxes.

The goal of the investigation was to evaluate the Norwegian Tax Administration’s work on ensuring a correct determination of taxes. This has involved mapping the Norwegian Tax Administration’s control of basic data and its control and follow-up of tax returns.

Method

The investigation is based on document analyses, statistics, interviews and lists of questions. In addition, a vignette survey was conducted, in which identical cases were sent to selected tax offices.

Results

The investigation shows that the tax regions have carried out few controls of basic data in the period 2007-2009, through the Tax Administration has initiated a project to analyse this low level of activity. Material (substantial) basic data controls relating to wage earnings are mainly carried out by the municipal tax collectors through local control of employers. On a national scale, the number of employers that have been subject to local control has increased from 3.5% in 2007 to 3.9% in 2009. The Directorate of Taxes’ performance requirement for the entire period was for 5% of employers to be controlled annually for the country as a whole.

The investigation also shows that the Norwegian Tax Administration’s ICT systems for processing and controlling basic data consist of several old and separate systems that, among other things, involve inexpedient and resource-demanding work processes for handling non-conformities.

The tax returns of the taxpayer groups wage earners/pensioners and businesspersons/companies are controlled using mandatory national controls as well as controls (value-oriented) defined by each individual tax region. The investigation shows that the tax regions have different practices when it comes to what is documented in connection with the follow-up of mandatory controls, and that there are variations between the regions with respect to how this work is quality-assured. The Directorate of Taxes will make more specific demands of the tax regions concerning documentation in connection with the follow-up of these controls.

The purpose of the regionally defined controls for businesspersons and companies is twofold: to uncover errors and omissions in the reported amounts and to have a preventive effect. The investigation shows that both the Ministry of Finance and the Norwegian Tax Administration believe that regionally defined controls for businesspersons and companies have not been as extensive as desirable. The investigation also shows that the number of businesspersons and companies for whom regionally defined controls resulted in a change in general income was significantly reduced in the period 2007-2009, and that the effect of these controls in terms of amounts has decreased considerably. The gross changes in general income decreased from NOK 2,640 million to NOK 870 million in this period.

One of the basic principles of the administration’s case processing is the uniform processing of equivalent cases. The investigation shows that equivalent cases risk being processed differently by the Norwegian Tax Administration, and that this is the case regardless of whether the issue is tax liability or the amount of tax for which the taxpayer is liable. The investigation also shows that there are several reasons for why the tax offices’ answers vary. This shows that there is a need to continue the effort to raise the competence level of the Norwegian Tax Administration’s case officers, and that much attention should be given to simplifying rules and regulations.