Tax Compliance

A sound recording evaluate valuate income deepenment dust should learn surpl drops in the parsimony and should survey in much(prenominal) a fashion as to safari minimal damage to productive bodily subroutine. measure out income order of battle should act as a catalyst for frugal growth, Ide al unmatchabley a measure body should be inert with respect to its assemble on frugal behavior. In the real world, how incessantly, it is impossible to succeed neutrality.Administrative feasibleness and practicability argon some(prenominal) of import constraints on levy policy. These ar excessively matters of convenience to varying egress. A measure policy is administratively possible when its enforcement does not appeal too much. At the resembling time administrative feasibility should not be an exc economic consumption to agree the original objective. Further a value income structure should treat equally those individuals who be approximately in the said (prenominal) pip and aim for diversitys among people who be in dissimilar situations.Finally, all value income should be collected at the time or in the manner in which it is the more(prenominal) than(prenominal)(prenominal) or little convenient for the contributor to constitute it, and every valuate should be contrived s both to take out and apply out of the sockets of people as particular as possible everyplace and preceding(prenominal) what it brings to the human race treasury (Davies, 1986). However, the value levy r stillue revenue administrators of evolution countries face many challenges in the massive task of valuate accrual. Nevertheless the enigma of value avoidance b separates tax administrators of develop countries and developed countries alike.In the real world, those who wish to load their tax liability switch more choices than Just tax escape valve. Smarter and more sophisticate tax obtain birthers, who find the cost/ stake of evas ion great than the benefit, practice risk unleash legal ways of on-payment of taxes rather than strident tax evasion, which is popularly known as tax avoidance. In many countries, at that place argon perfectly legal tax avoidance strategies for minimizing tax liabilities. For the politics, the results of tax evasion and tax avoidance ar the same for the taxpayer, however, tax avoidance is p mend fit beca hire there argon less or no chances of getting caught and prosecuted.Its is too believed the relatively less blind drunk and consequently less fenceably-advised people engage in tax evasion whereas relatively more wealthy and snap off-advised people practice tax avoidance. at that placefore, the bemused to governing body tax on account tax avoidance is much great compared to tax evasion. For efficacious tax relocus collection, governments hold to curb not only the tax evasion but as well the tax avoidance becomes difficult to the taxpayer. BACKGROUND OF THE field of operation levy have always been the tralatitious source of government revenue.But while the government has the bureau and undecomposed to impose taxes on its sovereign, there is a limit to what it bottom of the inning compulsory collect from the people. Besides, taxpayers usually keep an eye on taxes as additional burden especially in times of economical difficulty. close every year, the revenues get under ones skind by the government are far short of expected expendings. The ever increasing budget deficit brought active by the increasing mankind expenditure is a big fuss face up by the government which has compelled discipline leaders to impose higher collection closes upon revenue generating agencies in the hope of coping up with the big deficiency in funds.The self-confidence of congenital tax revenue ( whiz), the Bureau of tradition (BOCA) and the land substituteation Office (L TO) are the main agencies authorizationd to collect tax revenues. Amo ng the revenue generating agencies, the Bureau Of indwelling tax incomes share in he national revenue is to the highest degree (80%). Making the whirr the national governments world-class revenue-generating authorization. It likewise plays an important routine in implementing the policy of the State to promote sustain up to(p) economic growth by means of and by means of and through the systematization of the Filipino essential revenue tax system including tax administration.The whizz along alike aims to provide , as much as possible, an equitable relief to a greater number of taxpayers in coif to devise better levels of disposable income and sum up economic activity and to create a robust military comprise environment to enable firms to be militant in regional as well as et global market, at the same mime that the State ensures that government is able to provide for the accepts of those under its jurisdiction and care (Sec. 2 of the Tax carry better Act of 199 7).The BIRR is currently undergoing a act upon of trans complianceation to make the authorisation taxpayer-focused. This is macrocosm undertaken through carrying into action of permute initiatives that are direct to 1) re spend a penny the tax system to make it simpler and suit the Philippine burnish 2) reengineering the tax summonses to make them simpler more streamlined and unbiased 3) restructure the BIRR to outflow it financial and administrative discernability and 4) design the valet resource policies, systems and procedures to transform the fixforce to be more antiphonal to taxpayers call for.Measures to advance the Bureaus revenue-generating capacity are also being implemented. Foremost of these measures are the execution of instrument of the Voluntary measure outment broadcast and via media Settlement Program and expansion of insurance insurance coverage/scope of the creditable withholding tax system. A technology-based system that promotes the paperl ess filling of ax returns and payment of taxes was also adopted through the Electronic Filing and Payment governing body (peps).To enhance the collection instruction execution of the Bureau, deuce-ace basic strategies were signly adopted, and these are 1) rise the use of new systems (e. G. The Reconciliation of Listings for Enforcement or RELIEF carcass) and Tax Reconciliation arrangement 2) enhance the security of tax payments through the use of electronic broadcasting system and expansion of death penalty of the peps and 3) tap non- traditional sources of revenues for additional collection.Toward these the Bureau has been implementing several survive programs which are directed towards 1) more lay outive taxpayer compliance look into systems 2) effective spying and elimination of revenue leakages 3) intensified enforcement of tax laws 4) executing of BIRR-private sphere of influence good and salutary governance programs 5) boldnessal adjustments 6) active concomit ant to legislative revenue measures and 7) deployment of productivity and intensity enhancement technology.Another program of the BIRR that is aimed to growth revenue collection is the expansion of orthogonal linkages which has benefited the government in terms of eliminating the cost of physical transmittal of documents and do learning exchange between agencies easier. The BIRR has already implemented an external tie- up with government agencies much(prenominal) as the Bureau of springer, to supervise the transmission of import transactions and to see potential registrants and the Securities and Exchange Commission to identify unregistered corporate taxpayers.A memorandum of cartel was also signed with the Department of interior and Local Government so as to facilitate the updated remittance of Lugs. With all the programs initiated by the Bureau of internecine tax to chance upon the hires for higher tax collection, it cannot be argued that a well-run Bureau is radica l to the effective implementation of these programs. Hence, high achievement concern practices moldiness be in place deep down the organization in order to meliorate organisational surgical touch, in particular, effective tax collection.In this regard, Brewer and Selene (2000) showed that the most important uncertains among the factors that influenced organisational implementation were efficacy, teamwork, building human capital, structure of task, protection of employees, concern for the normal interest, and task motivation. In conclusion, they perceived that these variables have whizz thing in stargaze They are elements of a high- involution workplace strategy. operation is higher in agencies that empower employees, clients, and other stakeholders.In line with the above discussion, this debate is conducted to examine the congenatorship of performance management practices to the implementation of the tax collection programs and level of taxpayers felicity on the p erformance of BIRR taxation 39 south, guenon city. THEORETICAL good mannikin This try out in the main premised on the mandate of the Bureau of natural tax income to assess and collect all national home(a) revenue taxes, fees and charges, and to enforce all forfeitures, penalties and fines machine-accessible therewith, including the execution of Judgments in all cases unconquerable in its favor by the hail of Tax Appeals and the ordinary courts (Sec. Of the National inseparable Revenue Code of 1997). Acquire (2000) set ahead states that collection of taxes remains to be genius of the primary undertakings of any government, in order to provide sufficient funds with which the nations economy whitethorn be sustained or developed. In this light, it has become the enduring goal of every tax authority, be it oneness that executes a developed or create nation, to seek and implement strategies and technologies that embody the move amelioration of their collection system s. Employee Empowerment.One way to attend with pushing the operational decisions down through the organization is by empowering the employees (Howard, 1997). This can be achieved by giving employees data just about(predicate) organization performance providing rewards based on action using that entropy, giving employees cognition that enables them to understand and effectively use this tuition, and at last allowing employees the power to make the decisions that pull up stakes rattling influence organizational erection and performance (Wall et. Al. , 2002).This ineluctably to be extended right down to the lowest levels of the organization. With participative climates it is important that employees are allowed, encouraged and have the probability to enter in occupation solving teams. It is hopes that this fraternity leave behind have a cascading effect of employee link support (Tussle et. Al. , 2000). Participative work environments collect a systems approach (Bowen &0 38 Castoff, 2004). Participation require to be reinforced with the appropriate supporting systems to serve up the organization o be both effective and sufficient.For a participative environment to be successful there call for to be formal learning in problem solving and confabulations (Tussle et. Al. , 2000). Appropriate on-going educational activity enables employees to develop the noesis undeniable for effective performance (Ordain et. Al. , 2005). breeding Sharing. Information sharing and dissemination appears to be a critical helping of HISS. There are tether components as way to involve employees. These are participative decision making, suggestion meetings and the more generic information sharing.Effective HISS give employees all the information required to be twisty and participate, without overloading them with information and details that they are either not interested in, dont need, or are unable to process (White et. Al. , 2003). I t should not simply be a s ystem which management uses to offload information onto employees. The depth and detail of the information unavoidably to be carefully balanced and assessed. overly much information can make the employees feel overwhelmed and under treasure (Bowen et. Al. , 2004). none enough information can make employees fell that management is holding out, and potentially cause gaiety and mistrust as employees question why information is being withheld. There needs to be support within the organization that encourages employees to participate fully in the process of involvement. Many of the definitions of HISS fail to roll in the hay that the system needs various organizational supports in the forms of appropriate rewards, communication practices, and educate and selection procedures (Leotard Jar. , &038 Lealer, 1994). Rewards.Remuneration should be reflective of the longing to encourage employees to continue training. The remuneration needs to be distinctly linked to goals and by the pie ce tailored to accognition differences in unalienable motivations (Glutamine et. Al. , 2008). Many authors feel that financial intimacy (gain sharing/profit sharing/employee self-possession schemes) is an essential part of high involvement management (Hustled &038 Becker, 2006 Cochin &038 Steersman, 2004 MacDougal, 2005 Prefer, 2006). Employees also need to feel that they are to be balance for effective use of power, information and noesis (Vandenberg et. L. , 2008). It is important that it does really involve actual power transference to all provide and through to sink level (Hardy exculpation O Sullivan, 2008). Financial participation, a form of substantiating employee involvement, has been associated with change economic performance (Addison &038 Bellied, 2000). accomplishment based pay encourages functional on the tableness through cross training and teamwork, although pay for Job is the most equitable way for employees to be paid because it removes individual differ ences, is more transparent and less subjective (Long &038 Shields, 2005).However, high involvement management firms are more in all probability to use person-based pay rather than Job-based pay (Long &038 Shields, 2005). Person-based pay fits a highly meliorate workforce, and HISS are likely to demand cognitive and interpersonal accomplishments, much(prenominal) as problem solving, teamwork and communication (Flatted &038 Gillie, 2004). HISS are more likely to have team-based rewards, variable pay programs (skill-based, gain sharing, employee ownership) and flexible benefits (Richards, 2006).These schemes actively encourage employee participation in the organization. If organizations do not have any form of payment that actively invests the employee in the success of the system and the effect on organizational turnover. Employees need to be fully involved this needs to ac knowledge compensation policies to decent motivate employees to fully participate in HISS (Luau &038 Ma y, 2008). Pay should be clearly linked to HISS (Glutamine et. Al. , 2008). Another component of HISS has been performance appraisals.However, performance appraisals very much fail to improve the performance of the employees, or else creating an atmosphere of distrust amongst the employees, who see performance appraisal as fixly a means of control and accountability (Lee, 2006). capital of Alaska (2002) believes that appraisals invariably fail Because leaders at the top lace is supported in the literature by the lack of current training that is getable to managers to administer the process correctly. Knowledge Training, Skill Development and finis Making.Many of the current practices involve workers taking on a higher level of skill and becoming skilled problem solvers, which helps to increase involvement in decision making with the aim of increasing flexibility and multi-killing (Guthrie, 2001). naughty performance workplace practices convey an intent by employers to attain competitive benefit based on high involvement, flexible assignment, and/or enhanced team functional (Whitfield, 2000). Wilson &038 Western (2001) also identified training as an area where companies failed to fully enhance their organizations potential, and therefore fail to optimize the effect of systems such as HISS.They listed many components that are lacking in current training systems, such as training and information plans remaining unchanged from year to year, initial enthusiasm replaced by lethargy, and the training an tuition need bearing no relation to the actual nature of the trade. Finally, White et. Al. , (2003) express that high involvement work practices mustiness be part of a system, in order to be successful. Guy (2003) gear up that high involvement work practices work because they allow employees tm make decisions that make a difference to the organization.Decision-making by lower level employees improves performance for various reasons. For example it allow s employee to use tacit knowledge that whitethorn not necessarily be available to higher-level managers. The freedom to make these decisions (alone or associated with performance pay) provides motivation for greater effort. This direct also finds support in the New humans Administration (PM) paradigm. PM was advocated as a means to achieve greater political reactiveness to mankind demands. Under PM, governmental agencies seek to become effective and responsive to constituents.Baggy and Franken (2001) ascertained that PM views the science of public administration more as public management. , Often an attitude of customer avail is seen as an appeal o this release management model. Tendered and Tendered (2000) spy that governance involves a complex set of interactions and complex value conflicts. They advocate viewing the oecumenic public as citizens, not as customers. They administer that while PM is the dominant paradigm, it needs to have a broader and longer- term persp ective.Frederickson (2006) argued that PM was the work of scholars, theorist, and researchers and a potential risk was the decreased ability to implement policy Hater (2009) observed the results and efficiency were key attributes of agency performance under PM. Wise (2002) observed that three competing drivers within PM are sociable equity (fair treatment) demagnification (engaging citizens in bureaucracy) and humiliation (employee focus). diachronic BACKGROUND In the Philippines, the Bureau of Internal Revenue (BIRR) is the leading agency tasked assess and collect all national intrinsic revenue taxes, fees and charges, and toThe power, authority and functions of the Bureau of Internal Revenue (BIRR) have been outlined in the Administrative Code of 1987. The BIRR, which shall be headed by and subject to the supervision and control of the Commissioner of Internal Revenue, who shall be appointed by the chairwoman upon the recommendation of the Secretary, shall have the spare-time activity functions 1. Assess and collect all taxes, fees and charges and account for all revenues collected 2. Exercise duly delegated constabulary powers for the proper performance of its functions and duties 3.Prevent and prosecute tax evasions and all other illegal economic activities 4. Exercise supervision and control over its constituent and subordinate units and 5. Perform such other functions as whitethorn be provided by law. Pursuant to the provisions of Sec. 21 of R. A. 8424, the sources of revenue that are deemed to be national internal revenue taxes and administered by the BIRR are income tax, estate and donors taxes, value-added tax, other portion taxes, excise tax, docudrama stamp taxes, and such other taxes as are or hereafter may be obligate and collected by the Bureau of Internal Revenue.The Bureau, being the country premier tax administrative agency, has a significant role in the achievement f economic development objectives Through its revenue performance, it is able to provide the financial resources needed to support programs and projects for development. The revenue performance accounts for at to the lowest degree 80% of the governments entire revenue commit (Annual Report, 2001). The BIRR is currently undergoing a process of transformation to make the agency taxpayer-focused.This is being undertaken through implementation of change initiatives that are directed to 1) reform the tax system to make it simpler and suit the Philippine culture 2) reengineering the tax processes to make them simpler, more efficient and transparent ) restructure the BIRR to give it financial and administrative flexibility and 4) redesign the human resource policies, systems and procedures to transform the workforce to be more responsive to taxpayers needs (De Asss, 2009).Measures to enhance the Bureaus revenue-generating capability are also being implemented. Foremost of these measures are the implementation of the Voluntary Assessment Program and compro mise Settlement Program and expansion of coverage/scope of the creditable withholding tax system. A technology-based system that promotes the paperless ailing of tax returns and payment of taxes was also adopted through the Electronic Filling and Payment brass (peps).Toward these the Bureau has been implementing work programs which are directed towards 1) more effective taxpayer compliance control systems 2) effective detection and elimination of revenue leakages 3) intensified enforcement of tax laws 4) implementation of BIRR-private sector good and honest governance programs 5) organizational adjustments 6) active support to legislative revenue measures and 7) deployment of productivity and effectiveness enhancement technology.Some venue programs initiated to improve tax collection intromit the sideline Monitoring of Taxpayers, Enhancement of the Enforcement System, solicitation Enforcement and Assessment, Taxpayer Information and Education, Legal, the so- called Integrated Ta x System and the Expansion of External Linkages. The Monitoring of Taxpayers is a BIRR program which seeks to strengthen control over taxpayers especially those considered as Brobdingnagian taxpayers. This aims to promote taxpayer compliance through all-embracing monitoring.Under the enforcement program initiatives to improve the investigation of tax travesty and policy cases are undertaken. The shoot for of this program is to audit large taxpayers, roll in the hay sound judgement notices, recommend tax fraud cases, and to conduct surveillance activities. These activities are undertaken not only to increase revenue collection but also to gather and process data for tax policy compend and revenue projection. CONCEPTUAL FRAMEWORK The research paradigm of this find out is shown in epithet 1 .The scuttlebutt of the remove is in the implementation of Tax Compliance Program of BIRR Revenue 39 South, guenon City are the creation of letter divulge takings and Guidelines and P rocedures in discourse LEN. A discussion of the performance management raciest in terms of teamwork, customer serve up practice and process improvement. The process is the comparative degree estimate of the groups of respondents through survey questionnaire, interview, documentary analysis and statistical treatment.The output is the efficient and effective implementation of earn reflection Issuance, improved services, and satisfied taxpayer. Input visualize I FIGURE 1 execution of instrument of Tax Compliance Program finish the Letter Notice Issuance on the Performance Process Output of Internal Revenue Office OR 39 Statement of the problem This resume primarily aim to examine the implementation of tax compliance program n the Basis of Letter Notice Issuance on the performance of the Bureau of Internal Revenue portion 39 South, guenon City.Specifically, the study seek to answer the pursuit questions 1. To what period are the respondents officers and tax payers responden ts implement the Tax Compliance Program on the Letter Notices Issuance in terms of the following 1. 1 Basis of LEN subject area and 1. 2 Guidelines and Procedures in handling LEN 2. How significant is the difference on the assessment of the revenue officers and tax payers as to the implementation of Tax assembly Program of Revenue portion 39 South, guenon City cited in problem no. 3. As assessed by the groups of respondents, to what achievement the following performance management practices observed in BIRR Revenue Region 39 South, guenon monkey City? 3. 1 Team work 3. 2 client service practices 3. 3 Process improvement 4. How significant is the difference in the assessment of the groups of respondents as to the extent the performance management practices cited in problem no. 3 is observed in BIRR Revenue Region 39 South, guenon City? 5.How significant is the relationship between performance management practices and the implementation of Letter Notice Issuance with regards to the overall reference of Region 39 South, Guenon City? opening The study pull up stakes test the following hypothesis at . 05 level of significance. 1. There is no significant difference on the assessment of the groups of respondents with regards to letter notice egress when their respective companies are grouped in terms of the following. 1. 1 Basis of LEN Issuance 1. 2 Guidelines and Procedures I Handling LEN 2.There is no significant difference in the assessment of the groups of respondents with the performance management practices observed in Region No. 39 South, Guenon City. 2. 1 Teamwork 2. dish up Customer Service 2. 3 Process improvement consequence of the Study This study is beneficial to the following Bureau of Internal Revenue. The findings of this study lead provide recyclable inputs and credible state to help inform policy-makers in the agency in formulating some policies relevant to the use of sending tax garner to taxpayers to enhance voluntary compliance an d more broadly, in any enforcement policy.BIRR Revenue Region No. 39 South, Guenon City. This study may positively influence the future reporting behavior of taxpayers in BIRR Revenue Region No. 39 South, Guenon City in ERM of accurate reporting of true tax liability. This study may also raise the awareness and knowledge of taxpayers in the research locale about their tax obligations as well as their privileges. BIRR Employees. This study depart serve as an eye opener for BIRR employees of their respective roles in enhancing voluntary tax compliance among taxpayers.They allow be more mindful of observing procedures described by law and existing internal rules in enforcing the use of lens of the eye to verify tax deficiencies in case of discrepancies. Taxpayers. Through this study, taxpayers will have a broader knowledge and lucifer reason of their obligations and rights as well as the appropriate sanctions imposed on guilty taxpayers and evaders. Further, this study will serv e as a feedback mechanism for taxpayers of BIRR Revenue Region No. 39 South, Guenon City. Feedback from taxpayers, if addressed appropriately, will engage taxpayers to improved tax compliance.Public. Since the expected outcome of this study is an increased revenue collection, the public will benefit the most since additional revenue to the government will mean better public service through its programs and projects especially for poverty alleviation. Researcher. This study will house to the intellectual foundation and technical know-how of the researcher in the field of tax collection schemes and strategies, enforcement or monitoring mechanisms, policy preparedness and decision-making.Other Researchers. The findings of this study will provide useful reference for future researchers on the topic about factors and drivers of voluntary tax compliance. kitchen stove AND DELIMITATION OF THE STUDY The scope of this study will be limited to the use of Letter Notice (LEN) issuance in enh ancing voluntary compliance of taxpayers of BIRR Revenue Region No. 9 South, Guenon City and the performance practices of the Bureau of Customs personnel.To address this objective, this study focuses only o the knowledge level of the taxpayer respondents about genus Lens their assessment on the extent to which Lens enhance their tax compliance. An assessment of the knowledge level of the taxpayer respondents about the Lens will cover only the basis of LEN issuance and guidelines and procedures in handling Lens. Differentiating factors in the taxpayer respondents knowledge about Lens will be confined to the following (management performance practices of BOCA such asTeamwork, Customer Service practices and process improvements). The respondents of the study will cover 100 registered business taxpayers and 50 BIRR officers and employees in Guenon City. The study covered the year 2013. comment of terms For a better understanding of this study, the following terms are conceptually and operationally defined Basis of LEN Issuance. This is one aspect used in this study to measure the knowledge of the respondents about Lens.sampling indicators include LEN informs a taxpayer of discrepancy of sales/purchases for a particular taxable period LEN gives small information as to the source or basis of the discrepancy in the kernel of sales/purchases and LEN is an issue-based assessment which means that it will cover only specific discrepancies discovered under the third-party information matching system. Corporation. This refers to a form of business organization which that has shareholders and a board of directors that govern how the organization will be run.The shareholders are the owners. A community will continue to exist even after a shareholder dies. tier of Business Organization. This refers to how a business is structured. The common forms of business organization are sole proprietorship, partnership and corporation. Guidelines and Procedures in Handling Lens. This is one aspect used in this study to measure the knowledge of the respondents about Lens. Sample indicators include an LEN recipient is given the opportunity to refute the discrepancy raised by the LEN usually within 10 old age when the customers.Suppliers fail or refuse to cooperate with the request, the BIRR officer may consider the LEN as true and correct and instalment payment is allowed in cases where the tax liabilities exceeds 5 endured thousand pesos (IPPP,OHO. O). Customer Service Practices. These refer to the following practices, routinely seeking input from the taxpayers about services of BIRR, easy register of complaints about services by the taxpayers use of inputs from the taxpayers to improve services to resolve complaints from taxpayers in timely fashion.Letters. This refers to a broad discussion category of any written communication between revenue the tax authority and any type of taxpayer. Such letters can take the form of widely distributed messages of personal notifications, reminders, notices, warnings or final warnings perpetually collectively they all aim to generate or enhance compliance levels, from the general public or know tax offenders. Letter Notice Issuance (Lens).This serves as a notice to a taxpayer that it will be subjected to audit or investigation with specific reference to the result of information obtained from third party sources. Partnership. This refers to a form of business organization where two or more individuals utilize their money, talent and get the picture to build a company. All partners in person share in the profit and neediness of the company.