When it comes to tax disputes, the CRA’s official policy is to expedite resolution by fostering cooperation with taxpayers as early in the tax administration process as possible. \nTo this end, an updated protocol between the CRA’s Appeals and Audit branches aims to help resolve more tax issues at the audit stage by ensuring all relevant information is considered before a dispute moves to Appeals. The protocol sets out the roles and responsibilities of auditors and Appeals officers in referring cases between the two branches. It applies to audits regarding small and medium enterprises, international and large businesses, GST/HST, offshore compliance, and scientific research and experimental development. \nThe protocol specifically addresses situations in which taxpayers or advisors do not provide information until later in the process. Sometimes the tax advisor wasn’t involved in the case until after the assessment and wasn’t in a position to submit information earlier. But other times, some tax advisors hold information back because they think it’s in their client’s interests to bypass attempts to resolve disputes with the auditor and get the case into Appeals more quickly. \nIn a previous blog, I discussed some myths that encourage such counter-productive behaviour. A particularly tenacious myth is that the CRA’s Appeals branch will reject an appeal unless the taxpayer or advisor presents something new that wasn’t provided during the audit stage. \nCurrent CRA policy says Appeals officers don’t need new information or evidence to review and decide on an assessment’s correctness. In fact, the CRA says the practice of withholding information until the Appeals stage undermines the value of audit proposals and reassessments. And it results in costly and time-consuming appeals. \nReferrals back to audit sometimes mandatory\nThe CRA strives to maintain an open dialogue between auditors and taxpayers throughout the process to ensure more timely resolution of issues. The protocol now makes it clear that when new information is received at the Appeals stage, the case can and often should be returned to the auditor for more consideration:\n\n Referrals back to the auditor are mandatory under the protocol when information that the auditor specifically requested is not received until the Appeals stage.\n In other cases where substantial new information is received on a case under appeal (and in some other circumstances), referral back to the auditor is discretionary. \n\nWe should note that Appeals officers retain complete decisional independence on recommendations received from auditors. We should also keep in mind that there are other routes for resolving disputes before launching a formal objection with Appeals. If you can’t come to an agreement with your auditor, you can still move your issue up the chain within the Audit branch, from the auditor’s team leader to manager to assistant director, Audit.\nThe new protocol should help discourage taxpayers and their advisors from withholding information from auditors, unless there are extenuating circumstances. \nYou can find out more about “What you should know about audits” and “Objections and appeals” on the CRA’s website.\nKeep the conversation going\nI want to hear from you. Are your experiences consistent with the new protocol? What are your suggestions for improving the dispute resolution process? Please post a comment below.\nCPA Canada’s Tax Blog is designed to create an exchange of ideas on tax policy and practice issues, and their impact on those who practice tax. Your comments can provide helpful input into the public interest advocacy positions developed by CPA Canada.