Revenue to target pensioners on higher incomes

mandelbrot said:
Agree with you about the surcharge on directors where income is PAYE only, particularly where there would otherwise be no net liability.
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The directors surcharge is just as harsh and disproprotionate on directors with other income. In many cases, the amount of the surcharge can greatly exceed the amount of the other income received.
 
What I meant was cases where, but for the proprietary directorship, the person wouldn't be a chargeable person. If the other income is over 3,174 they'd be chargeable anyway, and the surcharge would apply (or would it not apply to PAYE income in that case, I can't remember of the top of my head?).

I wouldn't have much sympathy for a director who just didn't bother to operate PAYE properly in the company, and intended to just pay over the tax under their assessment.

EDIT: I've just realised we've gone way off topic and it's my fault - sorry Mods
 
What could revenue have done differently???? you ask.
Just one thing,
Put a notice in newspapers and TV to warn pensioners of the letter. Then send the letter.

What is not fully understood by a lot of posters here, it that no one thinks pensioners should be tax exempt, of course they and everyone should pay their tax and pay arrears too, where due. That's the law.

The problem is that law abiding elderly people who were not trying to evade tax got letters implying they had hidden information from revenue.
 
What could revenue have done differently you ask?
Just one thing, would have saved all the upset for so many people who had no tax issues.

Put an information notice in newspapers and TV to warn pensioners of the letter. Then send the letter.

What is not fully understood by a lot of posters here, it that no one thinks pensioners should be tax exempt, of course they and everyone should pay their tax and pay arrears too, where due. That's the law.

The problem is that thousands of law abiding elderly people who were not trying to evade tax got letters implying they had hidden information from revenue. The vast majority of whom are are not 'earning' enough to pay tax anyway.
 
Is it no a requirement under Revenue Law in Ireland that we must all make a yearly tax return on our income. If this is the case why is that law not enforce by Revenue. If it was enforced surely problems like this would not arise.
 
Ann1 said:
Is it no a requirement under Revenue Law in Ireland that we must all make a yearly tax return on our income. If this is the case why is that law not enforce by Revenue. If it was enforced surely problems like this would not arise.
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I wouldn't bank on it as it seems to me that different sections within revenue aren't talking to each other. As you can see in my post on page 2 - my relative files a yearly tax return every year and includes his OAP in this return for the last 4 years and has paid income tax on same. Yet he received one of these letters saying "it appears that you have not previously advised Revenue that you are getting such a payment from the DSP".
I think it is great that DPS are sharing details with Revenue ... the next great step will be when Revenue will start sharing information within its own departments and then this cock up won't happen again.
 

With all due respect, you don't really know what you're talking about here (unless of course you have an experience of the organisational structure and operations of Revenue!). While there certainly appear to have been a certain amount of errors in the letters sent out, it doesn't have anything to do with different sections within Revenue not "talking" to each other. Revenue runs on information, and it's systems are the most integrated of any of the departments of the State, much more so than DSP, for example.

I saw one of the letters today, and I couldn't really say what the fuss is about. And coincidentally, the person who received the letter is under the exemption limit but paid PAYE for several years on pension income, and will receive over €2k in tax back. I'd imagine there'll be plenty of people in that boat as this whole thing comes out in the wash.

From what I can see, the media caused a substantial amount of the aggravation in this situation. People who may have been bemused / confused by the letter they got, would have become understandably anxious when they saw and heard the scaremongering in the media, which basically suggested that 115,000 pensioners were going to be hit with bills of 4k - 8k...

I also like the way the Govt, who included in December's budget a €45m estimate of the yield from this particular programme, suddenly claimed to know nothing about anything when the whole thing kicked off, as if the whole thing was a solo run by someone in Revenue!
 
Why has the media not highlighted the loss in tax if some people did not return their state pension income. In my case the loss would have been around 4OOO and i have came across quite a few people who took the chance. The excuse that pensioners thought it was already taxed does not wash with me as i reckon most pensioners are well up in such matters. I am a pensioner myself and initially when an amnesty was being suggested i was appaled especially those who had a substantial liability. I have, of course, great sympathy to all who either owe little or nothing and who got letters and were anxious and worried as a result.
 
The "blame the meeja" line is a bit hackneyed but in this case I have to agree with you. Some of the coverage of this issue has been pathetic - e.g. Ivan Yates demanding an "apology" from some Revenue guy the other morning. Jeez! As happens a lot in these circumstances there was a lot more heat than light shed on the matter by most of the (primarily radio) coverage that I caught. For example nobody that I heard read out or explained what the wording was of these letters. It was just taken as given that these were letters demanding the payment of outstanding taxes.
 

The letter I saw was phrased quite delicately, in my opinion. The language used was of the tone "it appears", and was in no way definite about the issue, stating along the lines of "we strongly urge you to examine the figures overleaf" (i.e. the figures Revenue believe reflect the actual position), and to make contact if there is any query in relation to those figures. And it also quite clearly stated that if the income is under the exemption threshold in 2012 no tax would be payable etc...

Don't get me wrong, it certainly should have been flagged in advance, so as to soften people up for the issue of the letters, but the media blew the whole thing up once they caught a whiff of the possibility of some easy sensationalist pointscoring...
 
mandelbrot said:
Don't get me wrong, it certainly should have been flagged in advance
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Revenue should have a continuous publicity campaign reminding all taxpayers that ultimately the responsibility lies with them (and not Revenue or their employers or somebody else) to ensure that their tax affairs are up to date, that any changes in circumstances impacting these need to be flagged to Revenue, that (in general) most sources of income are assessable for income tax etc. etc. Many many people seem to assume that such matters are somebody else's problem and that when things go wrong (and tax is under or over paid) then it's just The Man trying to screw them.
 
If it is not back dated surely this is grossly unfair and morally wrong to the pensioners who were honest enough to be compliant
Not to mention evert tax payer in the country , a stark and obvious political stroke, will we ever learn
 
potnoodler said:
If it is not back dated surely this is grossly unfair and morally wrong to the pensioners who were honest enough to be compliant
Not to mention evert tax payer in the country , a stark and obvious political stroke, will we ever learn
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It's not exactly as straightforward as that though, in the majority of cases.

For people who only have pension income (private / occupational + state), this income is taxable as emoluments under Schedule E. Such individuals aren't generally required to file an annual tax return (which is what has given rise to this whole situation).

Given that it took a couple of years for Revenue to get and match the information they have to date from DSP, which appears to be less than 100% accurate, I don't see how they could in good conscience unilaterally just issue a load of backdated balancing statements for >100k people.

What is most likely is that they will attempt to analyse the information, find where the bulk of the liability lies (the 80:20 rule will probably hold up in this instance), and engage with those individuals. There's no point pursuing small amounts of tax that cost more to collect than they yield...
 
Ah now listen - its all mad Ted.

My 90 year old (challenged) Mum got the letter - its fairly unintelligible to me but if I am reading it right its saying that they have known all along about her private and her sw pensions but that the figure they were using for her sw pension was 1XX94 instead of 1XX98.......... Now if I was writing to a customer or client to say that I'd have said it simply. i.e. "Dear Mrs X.......oops we appear to have underestimated your sw pension by approx. €4 - this will mean a small adjustment to your tax credit which will be reflected in your net income in 2012".

I suspect she is one of many many thousands that the computer threw up as "non-compliant" and no one ran a de minimis analysis (or cost benefit analysis) or adjusted the letters to take account of the reality which in some cases was a few euros.

I don't think its an approach that will save much money for the state!
 

I think you're missing a key point in the letter (at least it was in the letter I saw), which says along the lines of "I STRONGLY urge you to examine the information overleaf" and went on to say that if there was any doubt as to the accuracy / correctness of the Revenue figure (i.e. the one to be used going forward) to please make contact. Given that clearly the records received by Revenue aren't 100% accurate, a de minimis analysis which would take those people out of the loop, would possibly result in a greater number of cases with unclarified discrepancies going forward.

In fact I'm watching Josephine Feehily on Oirechtais Report as I type here, and she just said exactly the point I'm making above - she urged everyone who got the letters to check that the new pension figures are correct. She also pointed out that most people have entitlements they haven't claimed, like health expenses, service charges etc...

The only case I've looked at, will result in a repayment of €1,900 to a pensioner who received on of these letters. When the dust has settled on this, the thousands of people who actually get refunds won't be long about forgetting the fright they got (from the sensationalist coverage in the media), when they're off on an unexpected holiday, or trading up the car...

But of course those refunds will be paid for out of the money collected from the people who deliberately or otherwise underpaid their share. And while it may cause some distress for those individuals, it's an unfortunate necessity, and no matter how delicately Revenue approached them a certain amount of distress would still occur.
 
Is there any chance someone can post up these letters so we can see the wording? Also what is the 80 : 20 rule.

I noticed yesterday that Feehily said that as interest was statotory it would be applied for 4 years, (where did she get 4 years) on those who had not fraudulently filled out tax returns and the penalties would be waived because a fraud had not been committed. Hope I got that correct, but it seems revenue have discretion on penalties but not on interest surcharges.
 

The 80:20 rule isn't anything tax related, but a generally observed phenomenon, in both economics and the natural sciences. It's also known as the Pareto Principle http://en.wikipedia.org/wiki/Pareto_principle.

Basically what I was suggesting was that the majority of whatever liability is due here (~80%), will probably be due from a relatively small subset of the pensioners (~20%). It obviously becomes less and less effective, from a cost-benefit point of view to keep pursuing the smaller amounts.
 
A work collegue of mine got one of the letters - he has been in this job for the last 33 years, he is 55 years old and is in receipt of no pension , private occupational or state ! He brought it in to show us , just for our amusement and we did get a great laugh out of the situation.
My point is that Revenue and Social Protection have a lot of work to do with their records and Revenue used a scattergun approach, which is not the best practice.
Why not start with the people they know are over the 50,000 level then work their way down ?
 
dave28 said:
Revenue and Social Protection have a lot of work to do with their records
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100% correct. In many cases their records are a shambles. Over 10 years ago, I stated my home address on the Form TR1 to register my business for tax, because at the time I hadn't yet got they keys to my premises. 10 years later I still get occasional Revenue correspondence, tax receipts etc to my home address although I have asked them repeatedly not to send it there. (They know full well already where my office is).


dave28 said:
My point is that Revenue and Social Protection have a lot of work to do with their records and Revenue used a scattergun approach, which is not the best practice.
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A scattergun approach works very effectively when your objective is to shoot as many people as possible. Revenue have used this strategy on countless occasions in recent years.
 
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