The Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to enhance its system to prevent the issuance of notices to deceased individuals during the ongoing crackdown on non-filers of income tax returns.
Recently, the FBR introduced a Standard Operating Procedure (SOP) for the deregistration of National Tax Numbers (NTNs) and sales tax registration numbers (STRNs) of deceased taxpayers.
The Federal Tax Ombudsman (FTO) recommended that the FBR should revisit the entire deregistration scheme, addressing system-based glitches hindering the deletion of NTN/Registration despite legal orders in the Integrated Risk Information System (IRIS).
According to the PTBA’s communication to the FBR Chairman, Section 114 of the Income Tax Ordinance empowers the Commissioner to issue notices to non-filers.
The PTBA highlighted that, post the implementation of “IRIS,” certain compliance requirements are system-based. Section 117 of the Ordinance mandates individuals discontinuing their business to furnish a notice to the Commissioner within 15 days.
The PTBA recommended upgrading the system to avoid issuing future notices if the taxpayer has submitted the required notice under Section 117, and the tax return for that tax year has been filed.
The association proposed that, in such cases, no further notice should be issued, and if the department needs information related to the disclosure under Section 117, they can issue a specific notice.
In response to the FTO’s recommendations, the FBR has issued a Standard Operating Procedure, which includes:
- Verification of Death Certificate:
- Obtain an official death certificate from relevant authorities such as NADRA, ensuring accurate details of the deceased individual.
- Change of Status in IRIS:
- The commissioner will mark the taxpayer’s status as “verified as deceased” in IRIS after verifying the necessary documents.
- Discharging Outstanding Liabilities:
- The concerned Commissioner shall evaluate outstanding tax liabilities, penalties, or obligations of the deceased taxpayer and proceed with recovery.
- Order of Cancellation of Registrations:
- The Commissioner will issue an order for the cancellation of registration or NTN and STRN in IRIS after verifying the death certificate.
- Updating Status in IRIS and Databases:
- The Local Registration Officer will update the taxpayer’s status as “deceased” in IRIS and other related databases.
- Communicating Deregistration:
- The Commissioner will formally notify legal heirs or representatives of the deceased taxpayer about deregistration along with a copy of the “Order of Cancellation of Registration” of NTN/STRN.
This streamlined process aims to prevent the unnecessary issuance of notices to deceased individuals and ensure efficient handling of their tax-related matters.
