Revenue accepts artworks as payment to settle tax bills
THE Revenue Commissioners are allowing taxpayers to slash their tax bills by donating valuable works of art or historical material to the State.
The annual report from the organisation reveals that, last year, one unnamed taxpayer donated three paintings by British artist Hughie O'Donoghue, valued at €190,000, to bring down their tax liability.
The art donated has to be of a high standard and acceptable for a "national collection'', the Revenue points out.
Once the donation is made, the art is professionally valued and the taxpayer is given a tax credit in return. The art eventually makes it into the various collections owned by the State, potentially including the National Gallery.
The donor only gets 80pc of the value of the items donated, which means the Revenue is protected if the piece of art declines in value.
Taxpayers can also donate property of significant "heritage'' value, but no taxpayers took up this offer in 2010, the report points out.
There is no suggestion any of the donors failed to comply with their normal tax obligations.
In 2009 the Revenue received some very valuable items to offset against people's tax bills. Material linked to playwright Brian Friel was donated with a value of €450,000, while a Padraig Pearse letter written during the 1916 Easter Rising was donated at a value of €206,762.
The Revenue has a committee set up to operate the scheme and value the items donated.
While the take-up of the scheme is low at present, some wealthy taxpayers may avail of it in future as the economy continues to slump.
Some taxpayers will not be able to donate such lucrative items as they are used as security for bank loans. Once a borrower defaults on these loans, the banks, or in some cases NAMA, is allowed to seize this security.
The Revenue revealed last week that tax returns are now at 2003 levels. There is outstanding tax debt of €2bn in the economy, which the Revenue is trying to collect.
But the Revenue said it was growing concerned at the so-called "shadow economy'' and was trying to prevent tax evasion in cash businesses.
It is also investigating those who have bank accounts in Switzerland, although it admits many of these cases may have already paid tax on the amounts in the accounts.
The Revenue Commissioners also revealed they were continuing another probe into 300 directors and executives from the banking sector.
To date, €1.3m has been collected on the back of these enquiries, although the organisation played down the scale of activity being investigated, saying much of it related to benefit-in-kind.
The Revenue are also working closely with NAMA and have collected information on 108 cases. What the Revenue want to know is how certain developers and borrowers financed certain deals and where they got the money to do this.
Last week it also emerged that over 15,000 people and firms can only pay their tax debts by instalment due to the severity of the downturn.
The Revenue said it had put "payment arrangements'' in place for the individuals and firms, who owe €160m. But it warned that only those who come forward early will get such arrangements.
The Revenue is not meant to be a "lender of last resort'', said the organisation.
During the year the Revenue collected €31.9bn, just 2.25pc ahead of the budget estimate.
Thirteen court convictions for serious tax and duty evasion were taken in 2010.
Audits by the Revenue produced €434m in the year, while other assurance checks, which are less severe than an audit, produced proceeds of €58m.