IRS automático – automatic filling and assessment of individual’s income tax return

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This case was submitted as part of the Call for Innovations, an annual partnership initiative between OPSI and the UAE Mohammed Bin Rashid Center for Government Innovation (MBRCGI)

The automatic filling and assessment of individual’s income tax return enables the tax return to be delivered in a simple, convenient and timely manner, as it exempts the taxpayer from any interaction except the confirmation of the pre-filled values.
The tax return is fully filled out by Tax Administration with the data gathered (income and expenses) from third parties information (employers, businesses, banks, etc.) and from the individual elements declared by the taxpayer in the previous year.

Innovation Summary

Innovation Overview

The need to reduce the administrative burden on citizens and on businesses has been a driving force for modernization and improvement in the Portuguese public administration. Along with the need to use technology wisely and to increase new capabilities to tackle larger amounts of data and to do it timely and efficiently.

Past initiatives led by the Tax and Customs Administration (Administração Tributária), such as projects on electronic invoicing, or collaborative projects within the Portuguese public administration (such as the collection of master data) and on the approval of rules and laws that establish a single requirement of information from the citizen, granted the opportunity for the simplification of declarative obligations.

For a large number of taxpayers, the Tax Administration already gathers all the relevant information needed to fill out provisional tax returns and, therefore, to assess their taxable income. In 2016 the government and the administration decided to gradually start phasing out the obligation for submission of IRS tax returns. The chosen set of first beneficiaries were the taxpayers whose only sources of income were employment or pensions, with no dependents in their care and no deductions or other tax benefits, among other pre-established criteria.

In light of the results of that first experience, in 2018 the decision was made to go further and to remove from the range of beneficiaries the restrictions on having no dependents in their care and having no tax deductions derived from donations made.

It was thus decided to make the necessary legal adjustments, in internal proceedings and in information technologies in order to start shifting the burden from the taxpayer to the Tax Administration, making it responsible for providing a provisional statement of income based on the data gathered, along with the corresponding provisional assessment of tax and the detail about the elements that supported the calculus of tax credits. After, the taxpayer has the option to accept and confirm the provisional statement or to submit, under normal terms, a tax return on an official form. The acceptance and confirmation of the provisional statement are considered to be tacit, if no action is undertaken by the taxpayer until the end of the deadline for submission under normal terms, which runs from April 1st to May 31st. The provisional statement becomes definitive and it is considered as submitted by the taxpayer for all legal aspects.

The development of information systems and software to support the provisional statements and assessments was made possible because there was a strategic investment in the simplification and enrichment of ancillary obligations (which provide the needed data on income) and with the mandatory communication of electronic invoicing (which provides the needed data on expenses eligible for tax credits). For eligible taxpayers, this saves time and prevents mistakes (by action or omission), when filling out income and gains tax returns. It also contributes to the reduce litigation between the Tax Administration and taxpayers, by facilitating and promoting voluntary compliance.

In short, this innovation helps to achieve goals such as:
- Facilitating compliance with tax obligations;
- Providing a faster response to citizens;
- Increasing the quality of the services provided to taxpayers.

Innovation Description

Innovation Development

Innovation Reflections

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Year: 2017
Level of government: National/Federal government

Status:

  • Implementation - making the innovation happen

Innovation provided by:

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