The Taxation (Tax Administration and Remedial Matters) Bill proposes changes for taxpayers, some favourable, but others less so.
The most objectionable proposed change for taxpayers was the proposal to add an additional procedural step for taxpayers initiating a dispute with IRD.
If enacted, the impact of the changes was the revocation of the current unilateral opt-out right of taxpayers to go straight to court to have their case heard.
Mr Turner said IRD had "tinkered around the edges" of the legislation in an effort to make the process better.
"The process is designed to help resolve disputes but it is hindering resolution. It has led many to get frustrated and led them to capitulate."
Part of the problem was the time-consuming and costly process, he said.
It was a robust process but it was so long and cost so much that people did not bother going through with it.
Taxpayers should have the right to choose to go straight to court and should not have to endure the lengthy process, Mr Turner said.
IRD accepted some of the criticism and decided the best way to address the criticism was to change policies internally.
The Institute of Accountants and the Law Society disagreed and wanted legislation introduced where there were points of frustration, he said.
The dispute process could take up to two years to resolve, costing thousands of dollars.
If the disputed amount was $20,000, it could cost more in legal and accounting fees by the time the process was resolved and then it might not be in favour of the taxpayer, he said.
"If it is costing you too much, you don't feel like you have had a fair hearing."
Without the option of going straight to court, people did not feel they were getting natural justice.
Under the new proposals, the taxpayer would have to request a notice from the commissioner of revenue permitting a challenge to be started.
The taxpayer had no recourse if the commissioner refused.
The commissioner was not entitled to agree under the proposals unless the mandatory parts of the disputes procedures had been completed, which would mean most of the cost and time would already have been borne by both parties.
In 1998, there were 108 tax cases that went to court.
In 2007, there were 13 and in 2008, there were 12, Mr Turner said.
The "robust changes" were introduced in 1994 and cases being heard by the tax authority had dwindled away since then.
Worse, was the lack of case law to consider when dealing with tax disputes as there were too few cases, he said.
An Ernst & Young research note said the opt-out provisions had only been reconsidered because taxpayers had been calling for the opt-out to extend to disputes also initiated by the commissioner.
Far from being extended, taxpayers' rights to access the courts without being bound to the lengthy and expensive disputes process had been further compromised.
