Revenue can’t rule out chasing pensioners for tax arrears
THE REVENUE Commissioners has refused to rule out chasing pensioners for tax arrears that emerged in a recent investigation.
The Chairperson of the Revenue, Josephine Feehily, was speaking at an Oireachtas Finance Dail Committee hearing after 150,000 pensioners received letters on their tax situations while some of them will have to pay extra tax.
It is not clear yet how many will have to pay more tax but a random sample suggested that untaxed income in some cases could be as much as €18,000, while more than a third were liable to pay tax on an extra €2,000.
She added that the issue of whether arrears will be pursued has yet to be dealt with.
I cannot answer that question today...My job is to collect tax,” she said.
“I have no authority to say that I will not pursue a certain category of people for money in relation to recent years.”
She added: : "I can certainly tell you we have more to be doing than chasing very small amounts from people who didn’t sign a false return."
Ms Feehily also apologised for any distress caused by the way the letters were sent out without any prior notice.
But she said had the investigation been made public it would have frightened 500,000 pensioners.
"The range and complexity of these records makes it impossible to give a simple answer and we need to understand it better," she said.
The Revenue has come under attack from organisations representing older people for their handling of the fall-out, which emerged after updated records from the Department of Social Protection were sent to the tax-collectors.
Worried pensioners who have not been contacted are continuing to call Revenue about their tax liabilities, said Ms Feehily.
However she said there was no further tranche of letters to go out and those who had not received one need not worry.
"I can say to those who did not get a letter that you should not be concerned," she said.
Revenue asked the Department of Social Protection for updated information on pension payments last year, which they received on December 1.
There was no immediate issue with three quarters of all cases, while another 100,000 people are expected to return their records through the self assessment system as normal next October.
But when they compared the files with their own records, Revenue found mismatches in 150,000 cases taxed through the PAYE system.
Ms Feehily said they had to take immediate action to make sure arrears did not build up for the taxpayers.
She said "tailored letters" were sent out to four separate groups.
These included 20,000 people who were paying too much tax, 30,000 people who had never reported their pension to Revenue and 85,000 people who had under-reported their pension or whose circumstances had changed.
There were also 15,000 pensioners who had not reported their State payments but had no tax liability on it.
Ms Feehily said they decided to send out letters because a large scale announcement about mismatches in the tax records would have sparked even more wide scale upset.
Of the 20,000 pensioners who may be due money back for last year, Ms Feehily said Revenue will process their claims as soon as they get their P35 details.
Revised tax credit certificates will be issued in the coming weeks for the 15,000 pensioners thought to be tax exempt.
Confusion remains over the remaining 115,000 cases. Ms Feehily said she will not be in a position to clarify this until well into the year.
But Revenue has carried out a small random sample of 51 pensioners who got letters, which showed Revenue owed them money in four cases.
In 14 cases, the recipients never told Revenue about their pension payments, while in 33 cases the amount of their pension was understated for various reasons.
The amount of income not taxed in those cases ranged from 20c to €17,820.
More than a third, 19 cases, involved an extra €2,000 taxable income that Revenue did not know about.
Ms Feehily said Revenue will start by examining in detail 2,500 of the largest cases - where the taxpayers have a non-State income of €50,000 or more a year.
She said she did not expect penalties and interest to happen in many cases.