Taxman blitz on pensioners and child benefit cheats
TAX officials are preparing to track down thousands of pensioners who have deliberately evaded tax.
They have also begun a blitz on child benefit cheats.
The Revenue Commissioners will go back four years to uncover pensioners who dodged tax. They may also impose interest, penalties and surcharges.
Officials are also about to unleash a new clampdown on lone parents and those on benefits who are hiding additional sources of income, the Irish Independent has learned.
And another blitz on social welfare payments was highlighted last night as child benefit was stopped for 5,600 parents who failed to prove they were living here.
There were two-hour queues outside tax offices and Revenue phone lines were jammed yesterday as pensioners who were unaware they had underpaid their taxes reacted to letters telling them they owe money.
Revenue officials expect to collect €45m this year in extra taxes after purchasing new computer systems allowing them to access data held by the Department of Social Protection.
The technology has allowed government departments and agencies to share information more quickly than before. It allowed tax details to be crosschecked with social welfare payments, which unearthed about 115,000 pensioners who had underpaid their tax.
Many of them face paying extra taxes from now on, after failing to declare they were in receipt of a private pension on top of their state pension. But Revenue officials suspect there are huge numbers of wealthy pensioners who acted deliberately when they failed to declare they were getting a state pension on top of a generous private retirement income.
They will pursue these for even more money, including significant back-payment of taxes from the past four years. It was made clear that there will be no amnesty for those who have not been upfront with the taxman.
Pensioners reacted with fury to the moves – which will have some couples paying an extra €8,800 this year.
There was also criticism of the tax demand letters being sent to people in nursing homes, sparking fears the pensioners would no longer be able to afford their residential care. Meanwhile, the Department of Social Protection suspended chid benefit payments to more than 5,600 people because they failed to respond to a check on residency and entitlements.
The department contacted 63,000 recipients by post last September. Any of those who did not write back within 42 days had their payments suspended, resulting in them going without children's allowance this month.
A spokeswoman for Social Protection Minister Joan Burton said the payments would be reinstated if welfare recipients provided the information – and arrears would also be paid. “It is too early to say how many of these claims will be stopped because customers continue to return the original certificate which was issued last September,” she added. But the fallout from the revelations on pensioners’ taxes is set to continue as thousands check to see whether their income will be cut during 2012. Age Action spokesman Eamon Timmins rejected suggestions that the people slapped with extra tax demands were cheats.
A Revenue spokeswoman insisted that the vast majority of the 115,000 who have been told they are underpaying tax on their pensions will not have their tax backdated, as it would be uneconomical to chase people for small amounts.
And she stressed that pensioners who have not received a letter from Revenue have no tax issues. “The vast majority of pensioners will have no arrears charges. . . But we will target cases with the largest tax liabilities.”
She was unable to say how many people would be subject to tax audits, but confirmed it would be at least 2,500 people who have incomes of €50,000 on top of their state pensions. Those people with occupational pensions of €100 a week on top of a state pension were unlikely to be probed, tax official Declan Rigney said.
Fianna Fail’s Barry Cowen questioned the timing of the crackdown. “Who thought it was a good idea to land a letter telling pensioners they are not tax compliant just days after Christmas without warning, explanation or clarity?”
A Revenue spokeswoman said the information arrived last November and defended the decision to issue the letters in the first week of January. Leaving it any longer would mean that the tax clawback would have to be spread over a shorter period, meaning higher reductions in income, she said.
Revenue officials have taken the unprecedented move of manning telephone phone lines today until 4.30pm.