The Fair Tax Act, Part XXXV
Now we will move into some taxpayer protections under the FairTax (something the current law doesn’t have much of).
`SEC. 506. BURDEN OF PERSUASION AND BURDEN OF PRODUCTION.
`In all disputes concerning taxes imposed by this subtitle, the person engaged in a dispute with the sales tax administering authority or the Secretary, as the case may be, shall have the burden of production of documents and records but the sales tax administering authority or the Secretary shall have the burden of persuasion. In all disputes concerning an exemption claimed by a purchaser, if the seller has on file an intermediate sale or export sale certificate from the purchaser and did not have reasonable cause to believe that the certificate was improperly provided by the purchaser with respect to such purchase (within the meaning of section 103), then the burden of production of documents and records relating to that exemption shall rest with the purchaser and not with the seller.
This paragraph basically puts burden of proof on the government (today the IRS functions as if the taxpayer has burden of proof, i.e. you are often assumed guilty unless you can prove otherwise). In addition, it also provides protection from businesses who might have been defrauded by someone using fake business certificates.
`SEC. 507. ATTORNEYS’ AND ACCOUNTANCY FEES.
`In all disputes concerning taxes imposed by this subtitle, the person engaged in a dispute with the sales tax administering authority or the Secretary, as the case may be, shall be entitled to reasonable attorneys’ fees, accountancy fees, and other reasonable professional fees incurred in direct relation to the dispute unless the sales tax administering authority or the Secretary establishes that its position was substantially justified.
This protects taxpayers from frivolous or baseless charges. Since the government will bear the cost of paying attorney’s fees in the event that it brings up a charge without good reason, this will have the effect of making the tax authorities focus on taking on cases with solid evidence. Today’s IRS is often considered reckless in its pursuit of tax penalties, and has bankrupted innocent people numerous times as they tried to prove themselves innocent with non-existent records.
