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Inadequate control of tax returns and basic data

The control of tax returns and basic data is an essential part of the Norwegian Tax Administration’s control activities. The tax regions’ controls of tax returns for businesspersons and companies have varied greatly, and the control of basic data has been given low priority. - It is important that the Norwegian Tax Administration increases its efforts in this field, says Auditor General Jørgen Kosmo.
Published 8/12/2010 12:00 PM

Document 3:11 (2009–2010) The Office of the Auditor General’s investigation of the Norwegian Tax Administration’s control of tax returns and basic data was submitted to the Storting on 12 August 2010.

In connection with the processing of tax returns, the tax regions’ controls are designed to uncover errors and omissions and to have a preventive effect. The OAG’s investigation shows that the extent to which the tax returns of businesspersons and companies are controlled often varies significantly from one tax region to the next. The investigation also shows that the effect of the controls was significantly reduced from 2007 to 2009. There was a reduction in the number of businesspersons and companies whose general income was changed. The changes in general income decreased from NOK 2,640 million to NOK 870 million in this period. Lower priority to such controls could result in incorrect tax assessments.

The system of pre-completed tax returns covers wage earners, pensioners and businesspersons. The investigation shows that the control of information that forms the basis for pre-completed tax returns (basis data) has not been of the expected scope and quality. Pre-completed tax returns cover more and more types of basic data. The new system whereby people are exempt from submitting tax returns means that the control of basic data has become even more important in order to ensure correct tax assessment. Individual tax payers may find it difficult to check whether the pre-completed information is correct, at the same time as the tax offices’ control of the tax returns could fail to uncover errors and omissions in the basic data. - Increased control by the Norwegian Tax Administration will have a significant effect, says Mr Kosmo.

The investigation also shows that equivalent cases risk being processed differently by the tax offices. This is the case regardless of whether the issue is tax liability or the amount of tax for which the taxpayer is liable. - It is important that the Norwegian Tax Administration continues its efforts to raise the competence level of its case officers, and that the Directorate of Taxes and the Ministry of Finance devote much attention to simplifying rules and regulations, Mr Kosmo concludes.

In its reply, the Ministry of Finance states that the investigation is comprehensive and relevant, while stressing that the results should be seen in a greater context, for example in relation to the resources devoted to other types of controls and other ministry functions. The Ministry is also of the opinion that the results of the investigation should be seen in connection with the reorganisation of the Norwegian Tax Administration in January 2008.

The deferral of public access to documents prepared by or for the Office of the Auditor General in connection with Document No 3:11 (2009-2010), cf. the Act relating to the Office of the Auditor General section 18 second paragraph, is hereby set aside.

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