Large Taxpayers’ Offices (LTOs) have shifted to a Zone-based system where each Inland Revenue tax official is responsible for dealing with all matters of the taxpayer including assessment, audit, legal, and recovery.
Earlier, specialized work was being done under the functional-based system where each tax official was dealing with special work like Legal or Audit Assessment of the taxpayer.
However, the tax official dealing in assessment has no clue about the audit or other legal matters of the same taxpayer. Under the functional-based system, the tax official dealing with the matters of Legal is not required to check recovery or audit issues.
The changed system has enabled the officials of the LTOs to exclusively deal with specific sectors and all issues of the taxpayers falling within the category of that sector.
Sources told ProPakistani that now the tax officials of the LTOs are more focused on all functions of the taxpayers in a specific sector.
It seems that the FBR has almost restored the old “Circle-based system” and abolished the existing “Functional-based system”. However, the FBR has used the words “Zones” instead of “Circle”.
In a report, the FBR said that the abolished “Circle-based system” was much better than the reformed “Functional-based system” operating in field formations of Inland Revenue (Large Taxpayer Units and Regional Tax Offices).
The FBR report stated that in terms of the work process structure, initially there was a Circle-based system, under which, each Circle was responsible for closely monitoring the performance of all taxpayers falling within its territorial jurisdiction.
The officer incharge was entrusted with all the responsibilities of maintenance of records, receipt, and enforcement of income tax returns/statements, conducting audit and assessment, recovery of taxes, filing of appeals at various appellate fora, issuance of refunds, and assisting the Commissioner in the issuance of exemption certificates.
Since all the work was the responsibility of one person, there was a unity of command, a better understanding of issues, and a sense of ownership among the tax officials, the report said.
In 2000, it became Functional-based, in which there was a lack of ownership and officers did not know anything outside their function.
The system has now introduced a “composite system” broadly similar to the comprising work units, the jurisdiction of which is by and large based on “territorial” specifications, and the work is entrusted to one person. Hence IRS is organized along tax instruments, territorial jurisdictions, and taxpayer segments (e.g. Large Taxpayer Offices) rather than functions, for instance, taxpayer registration, assessment, and tax audit.
This aspect of the organization may be explored further through consultations as it has implications for the efficiency of work processes and would impact the reform agenda of the reform project, the report added.
