PTBA Asks FBR To Stop Sending Notices To Dead Persons
The Pakistan Tax Bar Association (PTBA) has urged the Federal Board of Revenue (FBR) to upgrade its system to prevent the issuance of notices to deceased individuals during the ongoing initiative against 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 reconsider the entire process of deregistering deceased persons and create a dedicated SOP. This would specifically address any system-based issues that hinder the removal of NTN/Registration despite legal orders being issued in IRIS by the relevant IR authority.
In its communication to the FBR Chairman, the PTBA highlighted Section 114 of the Income Tax Ordinance, empowering the Commissioner to issue notices to non-filers. With the implementation of “IRIS,” certain compliance requirements are system-based. Section 117 of the Ordinance mandates that a person discontinuing their business should notify the Commissioner within 15 days.
The PTBA recommended system upgrades to prevent the issuance of auto-generated notices for future tax years, especially when the taxpayer has complied with the Ordinance.
They proposed that if a notice under Section 117, along with the tax return, has been submitted (in cases of dissolution of AOP, winding up of a company, or death of an individual), no future notice should be issued for filing tax returns. If the department requires information related to the disclosure under Section 117, they may issue a notice under Section 117, as needed.
PTBA emphasized that this approach would alleviate hardship, save the energy and time of field officers, and eliminate the need for this fruitless exercise.
- Obtain an official death certificate from the relevant authorities (NADRA) ensuring accurate details (name, CNIC number, date of death) of the deceased individual.
- Commissioner verifies documents and changes the taxpayer’s status in IRIS to “verified as deceased,” initiating subsequent steps for the recovery of outstanding liabilities.
- Evaluate and discharge any outstanding tax liabilities, penalties, or obligations of the deceased taxpayer in accordance with Section 87 of the Income Tax Ordinance 2001.
- Determine and recover outstanding sales tax liabilities as per Rule 11(4) of the Sales Tax Rules, 2006.
- Issue an order for the cancellation of NTN and STRN registrations in IRIS, following Rule 82(5) of Income Tax Rules 2002 and Rule 11 of the Sales Tax Rules 2006, after verifying the death certificate and relevant documents.
- Update the taxpayer’s status as “deceased” in IRIS and related databases, removing the details from active taxpayer lists. Forward the order of cancellation to the Local Registration Officer (LRO).
- Formally notify the legal heirs or representatives of the deceased taxpayer about deregistration, providing a copy of the “Order of cancellation of Registration” of NTN/STRN.