The Sunshine of Defending Public Records Laws: Fighting for Case Records and Ensuring Government Transparency

August 8, 2014 By Jennifer Barber
Bloomberg BNA

The Argument for Openness

In recent years, there has been an increased focus on transparency and disclosure in the state tax realm. While transparency and disclosure have always been the bedrock of any successful tax system, the importance thereof is even more so in an era where state governments are relying so heavily on increased enforcement and tax collections to balance their budgets.

The effort to balance state budgets often leads to tax reform. Taxpayers, in an effort to comply with ever-changing tax laws, sometimes are forced to challenge those laws, leading tax departments to interpret them. A number of interpretations ultimately give broad discretion to taxing authorities. Common areas where states use discretion include forced combined reporting, adding back related-party expenses, making transfer pricing adjustments, issuing alternative apportionment rulings and plenty more.

In situations where discretion is used, it is axiomatic that the state has an inherent obligation to publish guidance; but the reality is that guidance is not regularly promulgated. Why?

The overarching goal of any tax system must be to collect the correct amount of taxes. In order to achieve the correct collection, it is incumbent upon departments of revenue to enable taxpayers to determine what that correct amount is. Thus, the more transparent a voluntary compliance tax system, the more likely it is that a taxpayer will pay and the state will collect the correct tax. So it doesn't make sense for any department of revenue to play so-called hide the ball with how it operates, what it believes, how it administers, etc.

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