Pensioners caught underpaying tax hand over €90m to Revenue
PENSIONERS have had to hand over millions of euro to the Revenue after a massive trawl found that thousands of them were underpaying their tax.
Close to €90m has now been collected by the tax authorities after 150,000 pensioners were sent demands telling them to pay extra tax, and large numbers were hit with penalties.
The pensioners concerned get a private pension and a state one, but had not been paying tax on the state payment.
Most of them assumed the state knew they were getting two pensions, and thought they did not have any tax liability.
Between Christmas 2011 and January 2012, the Revenue Commissioners had controversially written to thousands of pensioners telling them to declare their state pension for tax purposes.
Pensioners had not been aware they were obliged to declare payments that come from the Department of Social Protection.
The handling of the issue caused huge upset among older people, with the Revenue chairperson Josephine Feehily forced to apologise for the "confusion and distress" caused to pensioners over the way the tax authorities handled the affair.
The most senior tax official in the country was forced to apologise as the letters were sent out over a Christmas period, were seen as confusing and complicated, and many of those getting them did not owe any tax money to Revenue.
"We caused confusion, we caused distress to some people, and I am extremely sorry for that," she told an Oireachtas hearing in 2012.
Now it has emerged the letters have generated double the amount of tax from pensioners than was first estimated.
And for the years before 2012, pensioners had to pay up another €24.5m. Much of this was tax, along with interest charges and penalties, the minister said.
This means the total yielded from the pensioners is now €89.5m. The original estimate for the haul from the pensioner tax probe was put at €45m.
Mr McGrath said that in the vast majority of cases, it was not deliberate tax evasion.
"Pensioners in receipt of private pension income made the reasonable assumption that the Revenue was aware they were also in receipt of a state pension from the Department," he said.
"It came as a complete surprise to the pensioners concerned that they had in fact been building up a liability because their state pension was not being taxed by Revenue."