Exempting bona fide Taxpayer from the Sanction on the Examples of Georgia and the United States of America

Abstract

The present article is dedicated to the research of the legal regulation and practice of using good faith to relieve taxpayer from sanctions. The notion of bona fide tax payer is a novelty for tax law. The norm, in question, does not give possibility to determine preconditions for application of the norm in which revenue authority, dispute settlement authorities and courts were entitled to exempt tax payer from the imposed sanction. Consequently, the issue of its use in practice becomes more relevant and interesting. The legal norm on exemption from sanction of taxpayer gives comprehensive discretion to taxation authorities and court to assess an act of taxpayer in each particular case and thus it invokes the establishment of incorrect practices and the formation of different approaches. In this regard, the discussion in the article is based on the comparative analysis of the legislation and practices of Georgia and the United States of America. The main features of the American regulation, which are given in the article, provide the opportunity to learn about the experience of the most successful tax system.

The article discusses and evaluates current practice of tax authorities and the courts as well. As far as practice and literature about the issue of exempting bona fide taxpayer from the sanction is one of the less researched issue and consequently it is quite controversial one. According to author’s opinion it is necessary to specify the norm, to interpret correctly the preconditions of the use of the norm and establish the burden of proof is crucial too, in order to guarantee public and private interests in the dispute process.