Tax refund for 5,000 OAPs after Revenue blunders
Thousands of pensioners have ended up paying too much tax after a blunder by the Revenue Commissioners.
One widow spoken to by the Irish Independent was down €800 this month after too much income tax was deducted from her pension.
The woman has a State and private pension but the wrong tax certificate was issued by Revenue to her private pension provider.
The mistake has affected 5,000 people after an error by tax officials uploading State pensions details from the Department of Social Protection. These people were allocated incorrect tax credits. Some people were mistakenly assumed to have twice the weekly State pension amount they are actually getting.
Now Revenue has apologised and promised to get corrected tax certs out to the pension providers as soon as possible. But pensioners are furious and have asked why Revenue was not more proactive about warning them of its gaffe.
One 78-year-old widow, who spoke to this newspaper, said she was due to get €817 from the private pension of a semi-state company.
But the mix-up meant she ended up with just €19 for February from her private pension.
Meanwhile, Finance Minister Michael Noonan has reiterated his promise to continue to cut tax for middle income workers earning between €33,000 and €70,000.
Mr Noonan also said he will reduce the amount of extra taxes paid by self-employed workers, compared to their PAYE counterparts.
On the tax refunds to pensioners, a revenue spokeswoman said: "Following a recent upload of Department of Social Protection pension information to Revenue's records, in accordance with our normal arrangements for exchange of this information, Revenue is aware that in a little over 5,000 cases the reduction of tax credits and rate bands has been incorrect." She added that the errors meant "some taxpayers have had more tax deducted from their occupational pension or salary in February than should have been the case".
Revenue stressed that for the vast majority of taxpayers, the upload of pension information was correct.
"We regret any inconvenience or upset caused to individual taxpayers as a result of this error. The problem will be resolved in the next pension or salary payment made by the pension provider or employer," Revenue said.
The error affects people who have an occupational pension along with the State PRSI (pay-related social insurance) weekly pension.
Another pensioner, the widow of a garda, explained that Revenue incorrectly assumed she was getting €478 a week, instead of a €230 pension a week, plus a living alone allowance of €9 a week.
This meant her tax credits - the amount of money you are allowed to earn before paying tax - from her late husband's garda pension was wiped out in tax deductions.
Revenue phone lines are understood to have been inundated with callers in the past few days. "Are you calling about the pension as well?," callers have been asked.
Revenue admitted the error was not spotted by its staff, but was instead brought to its attention by pensioners and pension providers.
Told about the mess, tax practitioner Cathal Maxwell said a couple would be entitled to a tax credit of €33,00 a year, and a PAYE (pay as you earn) tax credit of €1,600.
John Drennan's Guide to Politics - Spring 2015
The next election will change your life. In a special supplement with the Sunday Independent, John Drennan presents his guide to Irish politics.
Guide To Politics
- And they're off: the great election race begins but, as to where it ends, sadly nobody knows
- The key issues - Remember tax reform is not illegal, Enda
- It's like a talent show - you have to make the audience want you
- Could our interrupted revolution lie in the humanising of our politicians?
- 'It's awful losing your seat, it's a very public humiliation...'
- Too early to rule out FG/SF Coalition
- Shadowy back room boys and girls with the ear of ministers
- Enda and Joan's shaky house of cabinet cards
- Despite Enda's stated preference Easter 2016 not yet definite
- As they hatch their plans, what might be the hopes and ambitions of our party schemers?
- Battle of the leaders to be key deciding factor in election race
- Spectral scenarios or sweet dreams
- When the fuss is over who will be the winner?
The Gender Gap
The Generation Game
For pensioners, Revenue tends to reduce the tax credit it gives by the amount of tax on the State pension.
Mr Maxwell of PayLessTax.ie said: "If a mistake is made and it is assumed someone is getting double the State pension they are actually getting, there will be no tax credits left to apply to the occupational pension."
He said a mistake like this would also mean too much pension income would end up being taxed at the higher 40pc rate.
Three years ago, then chairwoman of Revenue Josephine Feehily was forced to apologise for the distress caused to 115,000 pensioners over letters it wrote over the Christmas period telling them they faced an extra tax bill that year.
Ms Feehily said the poorly-worded letters caused unnecessary confusion.