On The Tax Reconciliation

The tax reconciliation is the embodiment of the spirit of the contract in the fieldof tax law. In uncertain condition of the tax facts, which the tax institution andtaxpayer determined the tax fact through making an agreement, can be able toconvice the taxpayer, solve the tax dispute efficiently, implement the tax credit rightsand debts, ensure the tax in time and avoid the waste of the administrative andjudicial resources. Therefore, we should introduce the tax reconciliation to our taxlaw and demonstrate its legitimacy from the theoretical and practical aspects. Thetheoretical basis of it is the doctrine of the tax debt relation and the efficiencyprinciple of the tax. Furthermore, the requirement of harmonious taxations, ourtraditional thought of hating the lawsuit and the institutional defect of the traditionaltax dispute solution are the practical basis of it. In addition, it is necessary of ourcountry to introduce the tax reconciliation, because of the domestic tax legislationand levy practice.The tax reconciliation means that when the tax institution still cannot determinethe basic fact or the evidence of tax which is the proof of levy, or the investigationcost is too high to find out, it can make the consensus with the taxpayer by equalconsulations and mutual compromise in order to levy effectively, and make thereconciliation agreement. The nature of it is the administrative reconciliation. And itmainly applies to the process to tax set and inspection. The tax reconciliation notonly has the force of determining facts and binding the tax institution and taxpayer，but also can terminate the invesigation procedures. Moreover, the court shouldrespect the result of the tax reconciliation. That is to say, the court should adopt thetax fact which determined to making an agreement in the course of the proceedings,without any investigation. For the effective tax and economic administrationconsideration, the reconciliation agreement has the final legal force, and both partiesno longer argue in principle. The state of facts which determined by the tax reconciliation agreement may be overthrowed unless finding the new fact andevidence or having the condition that the trust is not worthy of protection. This is thetax reconciliation. Both the taxpayer and tax institution have the right to go back onhis word. When they go back on his word, they should bear the correspondingcompensation liability, and the reconciliation agreement had no longer binding uponthe parties.For the purpose of operating actually in practice and preventing the taxinstitution from pressuring into taxpayers, we should strictly regulate the taxreconciliation from the following aspects, such as the subject, rights and obligationsand the process. The subject is the tax institution and taxpayer, not including thewithholding agents. In a way of distributing the rights(powers) and obligations, weshould pay attention to protect the taxpayer rights, and set the obligation of taxinstitution corresponding with it to contain the tax institution. At the same time, thetax institution has the dominant power in order to promote the tax reconciliationprocedure smoothly and to carry out the reconciliation agreement. So, the taxinstitution has the power of guiding, supervising, and adjusting or altering contents,but informing, evading, keeping confidential and stopping the investigation are itsobligations. Besides, the tax institution should not repuire the taxpayer to continue toperform cooperated obligations. Taxpayers have the rights of the requestion, the freeoption, the equal consulation, right to know and claim, and obligations is to providethe correct information.The tax reconciliation process mainly includes three stages which refer to thereconciliation procedure of the start, consultation and the results. At the beginning ofreconciliation procedure, we should define the subject, condition and way ofstart.And in the negotiation stage, we should note the following four points. Firstly,the tax institution and taxpayer should be voluntary to reconciliation, either party donot force the other party, and negotiation also should be open and honest. Secondly,we can design some system, such as explain the reason, inform and challenge system,so as to limit the administrative arbitrariness and protect the rights and interests oftaxpayers. Thirdly, when the tax reconciliation failed, some facts of tax which thetaxpayer admited in negotiation, cannot be used as the sole evidence to which the tax institution make the tax decision accord. Finally, we can introduce the principle ofcivil law that is who advocates, who proof. It means that they should bear the burdenof proof to their opinions respectively. At last, There are two results of taxreconciliation, one is fail, the other is success.