Alarming reports are surfacing from tax advisers detailing a disturbing tactic allegedly employed by tax officials: pressuring taxpayers to withdraw complaints filed with the Federal Tax Ombudsman (FTO) in exchange for the release of long-delayed refunds. These complaints, lodged with the FTO, were a direct result of intentional delays by tax authorities in issuing refunds, some of which were due for over a year following finalized appeal orders.
Tax experts are raising serious concerns about this alleged practice, highlighting that the very initiative intended to expedite refunds – the creation of “Refund Zones” – has instead become a tool for further obstruction and manipulation. These zones, established under the guise of taxpayer facilitation, are now being accused of creating additional hurdles and fostering a system of “pick and choose” when it comes to processing legitimate refund claims.
The gravity of the situation is underscored by the experience of Miss Sofia, an Income Tax Practitioner representing a taxpayer in Lahore. Seeking to expedite a pending refund for her client, assessed at a Large Taxpayer Office (LTO), Sofia encountered a blatant demand. According to Sofia, the Additional Commissioner, who had held the file for a week, explicitly stated that he would only sign off on the refund if the taxpayer withdrew their complaint lodged with the FTO.
The threat, as recounted by Sofia, was equally concerning: should the complaint remain and the FTO rule against the department, finding maladministration, the Additional Commissioner allegedly threatened to file a representation before the President. This action, he warned, would effectively stall the refund process for at least another year, weaponizing bureaucratic procedures to silence taxpayer grievances.
Sofia detailed the arduous journey her client had already undertaken to secure their rightful refund. Initially, a partial refund was only issued after filing a writ petition. Subsequently, the Appellate Tribunal unequivocally ruled against the department’s curtailment of the refund, directing the issuance of the remaining balance along with compensation for the undue delay – and this order was finalized a year ago with no appeal filed. Despite departmental acceptance of the Tribunal’s order and repeated reminders and follow-up visits, the refund remained elusive, ultimately compelling the taxpayer to seek recourse with the FTO.
It was only after the FTO intervened and called for a report that the refund claim saw any movement. The Departmental Circle Inland Revenue (DCIR) processed the claim in the IRIS system and obtained administrative approval from the Commissioner. However, this progress became another instrument of pressure when the Additional Commissioner, holding the approved file, presented his ultimatum to Sofia: withdraw the FTO complaint or face further, potentially year-long delays.
“This is clearly blackmailing,” Sofia asserted, her voice resonating with frustration and indignation. She emphasized that such tactics were not only unethical but also a “manifestation of ulterior motives” that severely “mars the image of the Department.” In a direct appeal, Sofia implored the Chairman Federal Board of Revenue (FBR) to take immediate and decisive notice of this “further maladministration and misconduct,” demanding accountability and an end to these coercive practices that erode taxpayer trust and undermine the integrity of the tax system.
This alleged pressure tactic highlights a deeply concerning trend, suggesting a systemic issue where legitimate taxpayer rights are being subverted through intimidation and manipulation. The FBR now faces a critical juncture: to address these allegations decisively, ensuring transparency and accountability, or risk further damaging its credibility and fostering a climate of distrust amongst taxpayers.
