Attachment of bank accounts: Field offices raise issue of recovery rules with FBR

ISLAMABAD: The field offices have raised an issue with the Federal Board of Revenue (FBR) whether recovery rules are applicable for attachment of bank accounts of the taxpayers or administrative instructions would prevail that bank accounts would not be attached unless chief executive officer/owner is informed 24 hours prior to attachment and the approval of the chairman FBR is obtained.

Tax experts told Business Recorder that the recovery rules may not be enforced till the said administrative instructions are withdrawn from the field formations. In May 2019, the FBR had issued a directive to the field formations that there would be no bank account attachment unless taxpayer & chief executive officer/owner is informed at least 24 hours prior to attachment. The measure was highly appreciated by the business community and industrialists/trade that the harassment of the tax machinery has been effectively checked by these administrative instructions.

Business community is also very happy that such bold instructions are still intact to control harassment by the field formations. Later, the FBR issued recovery rules for recovery of the unpaid tax from the tax defaulters. The said rules may not be enforced in the presence of the administrative instructions.

The FBR needs to clarify whether the FBR's recovery rules are still applicable or administrative instructions would prevail. Under SRO 274(I)/2020, the FBR had empowered Inland Revenue (IR) officials to recover tax from defaulters from money held in term deposits or pay orders, etc, which are due at a later stage.

According to the new rules, the person shall send or remit the money to the commissioner through pay order or demand draft, or through banking transfer or cheques for payment to the government treasury on the same day the notice is served, or in case the money is to become due for payment to the defaulter at a future date, on the same date it become due.

Where a person is liable to make a series of payments to the taxpayer, the commissioner may specify the amount to be paid out of each payment until tax due has been paid, the rules said.

The FBR added that the recovery of tax shall be made only to the extent of tax due by the taxpayer. Provided that in case the money is held jointly with any person other than the defaulter, the shares of the joint-holders in such account shall be presumed, until the contrary is proved, to be equal. Every person to whom a notice is issued shall be bound to comply with such notice, recovery rules added.

Copyright Business Recorder, 2020