Revenue letter for tax plus penalties and interest

A paye worker with rental income has received two letters from revenue to pay tax plus penalties and interest for 2003 and 2004.

[SIZE=+0][SIZE=+0]The letter from revenue is dated 20th December and received today 15th January with a 30 day deadline to appeal from the date of the letter.[/SIZE][/SIZE]

[SIZE=+0][SIZE=+0]A rental property was purchased in 2000, and four returns were done in 2006 for 2001, 2002, 2003 and 2004 and revenue issued a rebate for each of those years. (After this returns were done annually and a balancing statement received and no rebate)[/SIZE][/SIZE]

[SIZE=+0][SIZE=+0]The error seems to have been that the taxpayer had received married persons allowances/credits instead of being assessed as an individual. The accountant states that he has the form he sent in in which the taxpayer was to be taxed as an individual. [/SIZE][/SIZE]

Questions
Why is the revenue letter with the appeal date of only 30 days only received so late, is this normal, (the accountant also received the letters on the same date). It only gives now 4 working days to bring an appeal. Can one initially appeal that the appeal date should be extending to give time to fully investigate.

Why have revenue gone back only to 2003 initially, is it because of the 6 year rule in relation to book keeping. We think that the 2002 return is also calculated incorrectly due to the doubling of allowances, why didn't revenue check this as well ?

If the error is due to a computer error by revenue hitting the married person button, then the tax payer is not liable surely for penalties and interest, if the revenue issued an incorrect credit/allowances document is the onus on the taxpayer to check it and point out the revenue error (in this case taxpayer did not notice)

If the error is a revenue error who will be liable for paying the accountant for the extra work this appeal entails.

The taxpayers is now unemployed and unable to pay back the money in one lump sum, what can be negotiated with revenue. Taxpayer wants to pay 20 Euro a week as doesn't have circa 15K lump sum as rebates were spent etc.

Taxpayer was surprised to receive rebates and asked accountant were they correct and was told yes.

Personally I'm wondering why if the revenue made the error why the tax payer has to pay anything. Taxpayer is very annoyed as they have done everything to comply they feel and might as well not have bothered. Very stressed about this etc

Unfortunately the first rule of thumb for revenue is 'Ignorance is no defense' so regardless of who is responsible for the error they can pursue the money. That said I find they are very approachable and given the circumstances I cant see them not negotiating here.
I have no idea why the letter was late but in fairness Christmas is a busy time and this is probably due to that. You still have time to appeal but I would get in touch straight away and see what they say.
Given your friends current circumstances I am pretty sure revenue will give time to pay this back as oppose to look for a lump sum.

elcato said:

Unfortunately the first rule of thumb for revenue is 'Ignorance is no defense' so regardless of who is responsible for the error they can pursue the money.

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But this wasn't about ignorance, it was the revenue who made the error and the taxpayer and the accountant didn't see it.

Bronte said:

A paye worker with rental income has received two letters from revenue to pay tax plus penalties and interest for 2003 and 2004.

[SIZE=+0][SIZE=+0]The letter from revenue is dated 20th December and received today 15th January with a 30 day deadline to appeal from the date of the letter.[/SIZE][/SIZE]

[SIZE=+0][SIZE=+0]A rental property was purchased in 2000, and four returns were done in 2006 for 2001, 2002, 2003 and 2004 and revenue issued a rebate for each of those years. (After this returns were done annually and a balancing statement received and no rebate)[/SIZE][/SIZE]

[SIZE=+0][SIZE=+0]The error seems to have been that the taxpayer had received married persons allowances/credits instead of being assessed as an individual. The accountant states that he has the form he sent in in which the taxpayer was to be taxed as an individual. [/SIZE][/SIZE]

Questions
Why is the revenue letter with the appeal date of only 30 days only received so late, is this normal, (the accountant also received the letters on the same date). It only gives now 4 working days to bring an appeal. Can one initially appeal that the appeal date should be extending to give time to fully investigate.

Why have revenue gone back only to 2003 initially, is it because of the 6 year rule in relation to book keeping. We think that the 2002 return is also calculated incorrectly due to the doubling of allowances, why didn't revenue check this as well ?

If the error is due to a computer error by revenue hitting the married person button, then the tax payer is not liable surely for penalties and interest, if the revenue issued an incorrect credit/allowances document is the onus on the taxpayer to check it and point out the revenue error (in this case taxpayer did not notice)

If the error is a revenue error who will be liable for paying the accountant for the extra work this appeal entails.

The taxpayers is now unemployed and unable to pay back the money in one lump sum, what can be negotiated with revenue. Taxpayer wants to pay 20 Euro a week as doesn't have circa 15K lump sum as rebates were spent etc.

Taxpayer was surprised to receive rebates and asked accountant were they correct and was told yes.

Personally I'm wondering why if the revenue made the error why the tax payer has to pay anything. Taxpayer is very annoyed as they have done everything to comply they feel and might as well not have bothered. Very stressed about this etc

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any chance you could get how the 15k is made up?
what is the tax amount each year?
what is the interest/penalty?
what standard cut off point was used- married/single?
was their any income liable to tax at higher rate?
was this as a result of some audit?
Their is a major difference between marries/single- Did Accountant not check assessment?
Was she married before?
regardless she would have to pay back overclaimed amount- worry about interest/penalties later and probably get away with not paying them once a proper appeal sent it explaining what happened

Ultimately, its the tax-payer's responsibility to ensure that credits, allowances, deductions, etc are correct and that returns are done on-time and accurately.

Your friend may have a case against the accountant, but not against Revenue.

There is a recent post where Revenue made a 25% reduction in penalties and interest as a gesture of culpability in a similar case (incorrect tax credits resulting in under-paymant) but I can't find it.

All Revenue post is printed, issued and posted centrally via their Logistics Branch and this seems to have resulted in delays in deliveries to clients (everything is printed in bulk, bagged and delivered in bulk to the super-duper hyper-efficient centralised sorting office in Portlaoise ).

The fact that the Revenue made a mistake counts for little. They expect taxpayers to check formal notices for errors.

papervalue said:

any chance you could get how the 15k is made up?
what is the tax amount each year?
what is the interest/penalty?
what standard cut off point was used- married/single?
was their any income liable to tax at higher rate?
was this as a result of some audit?
Their is a major difference between marries/single- Did Accountant not check assessment?
Was she married before?
regardless she would have to pay back overclaimed amount- worry about interest/penalties later and probably get away with not paying them once a proper appeal sent it explaining what happened

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I'm not going to post exact figures, we have calculated that the error is due to the incorrect allowances we are happy that the amount of tax owing is correct. There was no audit, not sure what has triggered it, anyone have any ideas what that could be?

mathepac said:

Ultimately, its the tax-payer's responsibility to ensure that credits, allowances, deductions, etc are correct and that returns are done on-time and accurately.

Your friend may have a case against the accountant, but not against Revenue.

There is a recent post where Revenue made a 25% reduction in penalties and interest as a gesture of culpability in a similar case (incorrect tax credits resulting in under-paymant) but I can't find it.

All Revenue post is printed, issued and posted centrally via their Logistics Branch and this seems to have resulted in delays in deliveries to clients (everything is printed in bulk, bagged and delivered in bulk to the super-duper hyper-efficient centralised sorting office in Portlaoise ).

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Thanks Mathepac, but let's forget about an accountant for a moment, if revenue have made an error by putting in the wrong credits and the taxpayer doesn't know they have done so how can the tax payer be at fault?
Are the any circumstances where the revenue can be deemed to be at fault.
In relation to posting documents surely an important document with a deadline should be sent by registered post so the revenue can confirm it was received and confirm that the taxpayer has been given the correct period to respond. What would have happened if the letter was another week, the taxpayer would be out of the reply time?

Bronte said:

Thanks Mathepac, but let's forget about an accountant for a moment, if revenue have made an error by putting in the wrong credits and the taxpayer doesn't know they have done so how can the tax payer be at fault?

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From what i remember, when you get your Tax Credit certificate for the year it does say you need to check that all the details are correct and let them know if not.
(i think that the first credit on the cert is eg "single person tax credit")
if any help!

Bronte said:

Thanks Mathepac, but let's forget about an accountant for a moment, if revenue have made an error by putting in the wrong credits and the taxpayer doesn't know they have done so how can the tax payer be at fault?

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Because it is the taxpayer's responsibility to check. Think of the Revenue notification as being in the same league as an invoice bearing the warning E&OE, which effectively means "this is how it is unless a mistake is found". And in the case under discussion here, a mistake was found.

Are the any circumstances where the revenue can be deemed to be at fault.

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Possibly, but I don't think this is one of them.

In relation to posting documents surely an important document with a deadline should be sent by registered post so the revenue can confirm it was received and confirm that the taxpayer has been given the correct period to respond. What would have happened if the letter was another week, the taxpayer would be out of the reply time?

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The Revenue Commissioners issue huge numbers, probably millions, of important documents with deadlines every year. The cost of registering them all would be enormous, yet few real problems arise as a result of using ordinary post. The few problems can be managed. For example, there used to be a procedure for admitting late appeals where there was a good explanation for somebody having failed to make a timely appeal. I imagine that still exists (I just don't happen to know for sure).

On the substantive issue: I think that a demand for penalties is somewhat heavy-handed, as it seems obvious that the taxpayer was not trying to evade tax. I suspect if that were contested, the Revenue would back down fairly quickly.

I wonder if the interest might also be contested on the grounds of equity. It's worth asking, but I don't know if they have legal authority to waive interest.

The Collector-General's office is generally fairly reasonable to deal with (definitely firm on some things, but also very humane). They will usually go along with a proposal that involves making one's best effort to clear things. If you contact them to make a payments arrangement, it might be easier to propose a monthly rather than a weekly amount (less bookkeeping for them, fits their systems better, etc.).

Ultimately, if the taxpayer got more allowances/credits than they should, even as a result of an undetected Revenue error, they got more net pay than they should and the tax is repayable.

However if there has been a Revenue error, albeit initially undetected, there may be some grounds for mitigation on the penalties. Interest is a difficult matter as statutorily Revenue are not supposed to have any discretion on that. Again though the taxpayer's bona fides and belief that everything was in order may help to get some ground from them on this.

In a case such as this though, I think it goes beyond handling the letter at arms length on a correspondence basis. I believe a meeting with the relevant officer is necessary to discuss options. Perhaps the Revenue officer, taxpayer & accountant need to meet and essentially thrash it out. You would be surprised at how many officious demands become more flexible once the human element enters the equation.

On the matter of the possible 2002 return also being wrong, Revenue can start an investigation in one year and widen it to other years if they think necessary. Closing 2003 now does not mean that 2002 will never come up. That may need to addressed now also.

Thanks everyone for the helpful suggestions.

I don't get why the taxpayer might still be liable for the interest if revenue made the mistake. The taxpayer had not underpaid tax until the revenue sent the rebates?

When the taxpayer received the rebates she was so surprised she asked the accountant was it correct. Do accountants check the calculations made by revenue or do they just accept them.

Naturally after this the taxpayer will check very carefully all documentation but had been under the impression that that was why one hired an accountant !

Bronte said:

When the taxpayer received the rebates she was so surprised she asked the accountant was it correct. Do accountants check the calculations made by revenue or do they just accept them.

Naturally after this the taxpayer will check very carefully all documentation but had been under the impression that that was why one hired an accountant !

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I do calcs before sending in submission. If the assessments or P21's which come back do not agree then I check both to see why and if there is an error have it corrected. Unfortunately one can never assume that everything issuing from Revenue is correct in all respects.

Q: If you got a refund and were not expecting it, why did you not query it with your accountant. Why did the accountant not query it with Revenue?

As far as I am concerned, this is the accountants fault. The submission is not complete until a notice of assessment is received by the accountant and tied into his submission made. If you check his invoice, he probably outlined this work! Check if there is an engagement letter with the accountant. If not, he has no grounds in your dispute.

Revenue frequently make mistakes (less so with electronic submissions) and you must check the calculations. In fact they state this on the notice.

Maybe the postman did not deliver the letter because of poor weather conditions. I know I got no post for four days and then a lot of post when the weather improved, which was reasonable

The taxpayer has done everything to try and sort this out with revenue who were most unforthcoming. It seems finally that revenue gave the married tax credit in error but they won't acknowledge this yet.

Taxpayer has sat with revenue who speak to her as thought she is guilty of something. They have been factually incorrect to taxpayer. Mentioned a refund given to them, tax payer said never received, then said spouse got it (they are seperately assessed), spouse says she never got it (correct) etc. Too long to detail this and how irate the taxpayer is who has spent hours and days trying to sort it out.

Finally got some of the documents that revenue received and the accountant clearly wrote seperately assessed. Had meeting with accountant who is major annoyed with revenue who won't reply to his letters, (ignoring certain points he makes while replying to others). Tax payer is getting the same. Also they have the problem that the collection office (enforcement?) is in Limerick, who only speak in writing, and taxpayer in in a different county and it seems the two revenue's don't talk to each other.

Accountants advice now is to do nothing and let them throw the book at tax payer. (Out of work and one asset conceivably in negative equity) That most people are now not even bothering to reply to revenue. What do others think? Taxpayer is willing to pay the tax (by instalment from dole) and revenue are aware of this.

I've just realised there were over 1K views of this topic but very few replies. Why is that?

From re reading your posts it is not clear what way the person was taxed

You have separate assessment v separate treatment(single individual) which are two different methods

if it was separete assessment-they could be transfer of bands

http://www.revenue.ie/en/tax/it/credits/married-persons-taxation.html#section6

Does same accountant do husband tax affairs as well?

I leave it with the accountant as it looks here like we dont have full facts as no visual assessments to look and he does have full facts

IME, a ratio of 100:1 views to responses is not unusual, check other threads. In this thread I've posted once (twice now) and viewed 17/18 other responses more than once.

I'm sorry (and based on personal experience I find it very surprising) to hear of the difficulties in communications with Revenue which I am at a loss to try and explain.