Policy Forum: Some Reflections on Ethical Considerations in Tax Litigation

Abstract

Discussion of ethics in taxation usually concerns tax avoidance. But what ethical principles are or should be involved in the conduct of tax litigation? Both parties must observe the ordinary rules of conduct required of them by the court. Are they free, however, to advance any argument to make their case? Taxpayers will be appealing a tax assessment contrary to their view of the tax that the law requires of them. They are bound to make any argument that is open to them. A revenue authority should have broader considerations in mind, as the body responsible for the overall administration of the tax system and as a repeat litigant in court. Consistency of approach and respect for the integrity of the tax system and for a taxpayer's right to demonstrate that tax is not legally due should be among the ethical principles that the revenue authority adopts in conducting tax litigation.