Research On Legal Construction Of Offer In Compromise

Offer in compromise has already been successively operated for many years by regional tax authorities of our country,and been used as a new and effective method of tax management.However,as a new work method, offer in compromise has the following shortcomings such as the legal authority is too low,the rules are mostly of principles which lack maneuverability and the legal situation is not clear……All these issues affect the interests of both the revenue and the taxpayers.In order to solve these problems,we should refer to the academy and practice of offer in compromise under countries and areas outside China to establish an effective solution mechanism.In this dissertation,I endeavor to explore whether offer in compromise has any possibility to be applied in taxation execution and if there exist any conditions of application.I first study the permissibility of compromise contract in formality and substance under tax law,and then research the relationship of offer in compromise and compromise contract.I suggest that with the development of that the tax law relation has turned into creditor-debtor relation from the traditional power relation,compromise contract seems to have room of application.However,restricted to the principle of statutory taxation and equitable taxation,traditional theory insists on not allowing compromise between taxation department and taxpayer.It was not until 1925 that the German Empire Financial Court ruled in a case that compromise under circumstances that the facts of taxation is vague is allowed for it did not deal with the principle of statutory taxation and equitable taxation.Afterwards,in 1984,the German Empire Financial Court developed a theory of contract of taxation facts, which deeply affected German and China Taiwan.Since then,there comes another theory about the possibility of conclusion of compromise contract where legal rules are vague.In other words,according to the conditions of compromise contract,compromise can be achieved under taxation administration and tax litigation.This dissertation concludes that there is room for compromise contract under tax law,and where the taxation facts are not clear and legal rules are not exact,the case is peculiar and the court cannot find out the result after investigation or the expenditure is too large,the taxation department may compile with the taxpayer and reach a compromise contract.However, compromise does not equate to offer in compromise.Offer in compromise is only a stage and precession procedure of reaching a compromise contract, and if the result of offer in compromise accord with the conditions of compromise contract,it has binding effect.Otherwise is an agreement based on the principle of good faith.Based on the protection of taxpayers' rights and interests,the tax department must inform what effect taxpayers' acts will incur.I research the procedure of offer in compromise,such as the claim of offer in compromise,putative taxation,amount change of forfeit,coordinating liability,onus propend,protect of trust,informal negotiation base on factual administration of tax department.In order to avoid that offer in compromise be abused and impair the interests of taxpayer,the liability of informing is important in the procedure of offer in compromise.Many countries and districts apply offer in compromise in practice which has the following characteristic:There are detailed rules about offer in compromise in the US and this institution has the merit of due legal procedure,so the Mainland of China can derive from these experiences contrasting with Taiwan's experiences.Taxation is closely linked with the people,it is necessary to introduce advanced theory and practice of substantial law and procedure law into China to consummate China's offer in compromise of taxation.