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Dublin: 14 °C Thursday 20 June, 2013

Revenue not ruling out back tax on pensioners

Declan Rigby from the Office of the Revenue Commissioners said that there will not be an across-the-board amnesty on pensioners who owe tax.

File photo.
File photo.
Image: Laura Hutton/Photocall Ireland

THE OFFICE OF the Revenue Commissioners has refused to rule out the possibility of back-taxing pensioners who have understated the amount of income they were receiving.

Speaking to Morning Ireland, Declan Rigby from Revenue said there would not be an amnesty on the tax that is owed by some who under-declared their incomes.

However, he said that more analysis would need to be carried out on the data the Revenue received from the Department of Social Protection, which led to the liabilities being identified.

“We have to see what the implications of the differing groups are after doing more analysis…and we need time to do that,” he said.

According to Rigby, the Revenue is concentrating on 2012 and he indicated that any back-tax would be targeted on people with a higher income.

Yesterday, 115,000 pensioners who receive a State pension, as well as a second source of income, were informed that they may have to pay more income tax this year.

“The variety involved in this is immense,” Rigby told RTÉ. “It may be that somebody has a very modest income and could see a €5 to €8 a week increase in tax.”

However, those on a higher income tier may have to pay up to €4,400 per year or €8,800 if married.

Ribgy explained that the onus was on pensioners to tell Revenue about their State pension if they were also receiving a salary, occupational pension or State pension.

Those over 65 earning more than €18,000 (or €36,000 if married) are liable to pay tax.

“It is a tricky area to interpret and understand,” conceded Rigby.

Anyone whose State pension is their sole income does not have to pay income tax and about 20,000 will end up paying less tax as a result of the data exchange between the department and Revenue.

Age Action has called for more information to be disseminated so State pensioners can ensure they are tax compliant.

Eamon Timmins, a spokesperson from the group, said there needs to be a clear, public information campaign from the Revenue Commissioners and the Department of Social Protection.

“The letters from the Revenue Commissioners stating that pensioners owe them monies as a result of underpayments going back a number of years, have caused anger among those who received them,” Timmons added in a statement.

The bottom line is that law-abiding citizens are now left with tax bills at the start of a year when there have never been as many demands on their pensions, and with new taxes and charges to pay. It will cause further hardship for many older people.”

Read more: 115,000 pensioners told: You’ll have to pay more tax>

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Comments (49 Comments)

  • As I read more about this, it highlights just how poor an organisation our government is – If the department of social protection and the revenue only had a joined up, logical way of working then this problem would not have arisen in the first place.

    As it is, it seems welfare is shuffling over thousands of documents for revenue to rustle through and see what the story is.

    Meanwhile social protection can’t means test child benefit and the department of finance can’t count the national debt.

    And have we seen a wholesale replacement of the management of these departments, or a change in how they do business?

    Are there any more top EU jobs we can send these wasters off to…?

    Reply
  • Neil C. 06/01/12 #

    I think when people reach ye twilight of their life some concession should be made. A legal tax doesn’t make something fair or ethical

    As for this self assessment nonsense, it puts 100% responsibility and accountability to the private individual so that penalties can be applied if errors are made. However that doesn’t seem to apply both ways. The government in recent years changed the tax laws in relation to employee stock schemes so they are no longer self assessed. Clearly they realised self assessment didnt work in that area.

    But ultimately, this is again what deflects citizens from the real issues in the state. Pensioners with additional tax liabilities aren’t the problem here. Nor is collecting that tax going to contribute anything material to the coffers

    As for the comment about pensioners should pay more. Didn’t they have mortgages and bills to pay at some stage in their life?

    Reply
    • Absolutely Neil C.
      This is as you say a deflection tactic from the ridiculous things that are going on else where in this country . Start at the top . The high wages TDs receive , do we really need so many , then there is the multi pensions ”retired”politicians receive ,
      Most of the pensioners who may not be paying their full whack are not avoiding it on purpose , if they have always paid their dues it is highly UNLIKELY they will default now…… It is up to the revenue to alert people to what they owe . This is a cop out for the Government and again pick on the little man .It is as if they are turning us ordinary folk on each other ,to cause a deflection from the real fraud.
      I am not saying that people should not be paying their dues , but not back date it for these pensioners . This is unnecessary fear mongering and scare tactics. ….

      Reply
  • Self Assessment has been with us for many years and it means exactly as it says . you assess how much tax you owe and pay the damm thing . We all hate it but like rain Tax will always be with us

    Reply
  • Agree Donal. The elderly are very well looked after in this bankrupt State. Rightly so.. However this is tax owed on private undeclared income. The alternative is to yet again screw the coping classes who are bled dry with mortgages, family expenses, taxes etc. The elderly have none of these bills and in general are very comfortable so IMO could afford to contribute a bit more.

    Reply
  • In fairness this is not the full story. I know one case where the pensioner was paying the tax and did declare the State pension and private pension.

    On the first year of the state pension there was tax deducted correctly for the time the person received it to the end of year, which was 8 months. The following 2 years the tax office decided to only to tax 8months each year.

    So the pensioner here did declare the pensions, the tax office did tax it but they failed to tax it correctly. Is this really the pensioners fault?

    Reply
    • Fault is not the issue. Correction is necessary and adjustment to deductions to reflect the correct dues are paid is the responsibility of the tax payer.

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    • No Conor . Fault is the issue here particularly as the letter states a form of apology while saying that tax is due….

      Reply
    • Conor you have already stated the hang them as defaulters. Your views on the matter are not exactly impartial.

      The person I have described is going to pay the back tax, in fact they have always done their best to ensure all tax matters where done correctly. But the issue here is not as described in the article. The person did declare the incomes but the people in the Public Service who get paid to do a job failed to do the job properly. So is this just a case of PR spin on the issue.

      Reply
  • There are to many departments dealing with the same issues they are falling over on another.We hear that their were two departments dealing with this and one did not know with the other was doing. So I think they should have only one department to deal with it.However I think if tax is owed it should be paid.Anyone with a private pension should declare.Everyone has to pay tax.There is no excuse everyone should be aware if they have a big income it is subject to tax.

    Reply
    • I totally agree with you and I think a lot of cute shysters may not have declared all their income in the hope Revenue would not cotton on, but my carp is with the convoluted, difficult to understand and complicated letter sent out to pensioners, the majority of whom are fully tax compliant and have enough troubles to contend with at this stage of their life. My parents got one and although I know they are fully paid up tax payers and have declared all their income they are worried sick now. Revenue should not have sent letters out to every pensioner without having checked their tax situation first – if they checked my parents situation they would have not sent out the threatening letter to them.

      Reply
    • I totally agree with you and I am sure there are shysters out there among the OAPs who don’t declare in the hope Revenue won’t go after them but my carp is with the letter sent out to pensioners yesterday regardless of whether they are tax compliant or not – it seems anyone in receipt of Social Welfare income and Old Age Pension was mailed whether they declared or not and the letter was so complicated, convoluted and difficult to understand one would need to be a totally up-to-date expert on the subject. It was a cruel, heartless thing to do because it would give anyone a headache to read the damn thing.

      Reply
  • If the tax is owed, the tax needs to be paid.
    No one should be exempt. If even one person is, then why have the rules there at all, or why bother obeying them?

    Reply
    • If our taxes were not, for the most part, used to pay interest on a currency that should never have to be issued at interest, then I’d agree. However, as our currency, like that before it, is issued at interest by private central banks who do little to warrant a huge slice of our work product other than the fact that they run fancy printing presses, I’ll have to disagree with you.

      Reply
  • I really don’t buy the ‘oh poor old people didn’t know what was going on’ BS that is being spouted around this.

    Reply
  • The rev commissioners have to take the blame in cases of tax owed for previous years. They do the issuing of tax credits and collect annual declarations of income and tax paid. If they did their work correctly this would not have happened.

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  • So which gov official or public servant will be sacked for this incompetence? Nobody.

    Reply
  • Well said Mr. Campbell.

    Reply
  • Brilliant PR by the government. We turn on each other. Instead of sticking together and fighting these tax rises. Austerity can’t solve this problem. The clock in this country is turning backwards to the 70s & 80s. High taxes,rising unemployment & swathes of folks leaving the shores. Where is the future in Ireland?The burden will fall on the remaining few. That is the big picture we are facing.

    Reply
  • Does anyone fill out a tax form anymore. When my dad retired he was asked on a tax form for details of additional income which he declared, surely these persons in question failed to do so, so why should they not pay now. Or have they tax doged all their lives and thought they could get away with it. About time technology caught up with tax dodgers.

    Reply
    • lots of people who have declared and paid on all their income received these letters yesterday – not just the tax evaders, that is what is annoying most people. Revenue could not be bothered to check first, putting the onus on the elderly to prove their innocence of tax evasion. No longer are we innocent until proved guilty it seems

      Reply
  • A back tax! next they will be taxing our legs,

    Reply
  • Here is my solution. Just have one department, the revenue department. Then there won’t be two departments who aren’t talking to each other (like a couple who fell out about something years ago and haven’t spoken to each other since). Everyone over a certain level of income would pay tax. If you fell below a certain level of earnings, you would get a tax credit from the Government. (This would be unconditional, without means-testing or work requirement.) This would replace unemployment benefit etc. So it would always pay people to work full- or part-time, to start up small businesses or co-ops, etc. On the other hand, people who chose to stay at home to mind the children would also be able to do that if they wished. The people who formerly administered the unwieldy and bureaucratic welfare system (that didn’t talk to the tax system) would be freed up to pursue tax evaders. This would greatly increase the tax intake. So it would be a win-win situation for everyone.

    Reply
  • These people are going to try and fleece the old using opinions back dated for years and yet i seem to think the old are a lot cuter than they get credit for.

    Scrapping the barrel by so called governments. What’s next?

    Reply
    • This is undeclared income, Loyallrish Citizen. Income some people didn’t declare properly. It is no different to when Beverley “Cheesey Grin” Cooper Flynn was offering people means to avoid paying DIRT tax years ago. It’s cheating our taxation system. People who engaged in this are hardly loyal Irish citizens. Everything is tightening up now & that’s a good thing. We have the IMF to thank for that as our useless shower of gobshites in Fául Eireann can’t/won’t do it. If Govt are going down this route, hit those at the top, too.

      Reply
    • Should read “Fáil Eirean”. D’oh !!

      Reply
    • The Govt. has to be commended for this. It is what happens in normal countries. That it has been going on to this scale is just symptomatic of the reasons that we have had 90 years of emigration and poverty.

      The Govt. should ensure that it is back paid as well.

      Reply
    • @Declan Carroll: As the news story has developed the approach seems to be softening against the needy and hardening against the more affluent.

      They should really concentrate on those at the top.

      I still consider that some of these old age pensioners can give them a run for there money. They can be quite crafty at times.

      Reply
    • Tim – I actually agree with u on what u say. LoyalIrish Citizen – they need to start at the top & work their way down. Leave those less well off alone. Yes – some of those pensioners could teach some a lesson or two. Everything is being streamlined & linked together. At the end of the day, that can only be a good thing that’s fair. Hopefully !!

      Reply
  • Hang one defaulters as an example to others!

    Reply
    • Ok so shall we start with your relatives?
      Let those without sin cast the first stone …
      Most of these people are innocent of their ”crime” .
      Let them start paying their taxes from today, but back dating it is not right.

      Reply
    • I don’t mind. Find 1 who defaulted or evaded tax and make him/her accountable
      Otherwise there is age discrimination in the tax system.
      Next thing you will find elderly wealthy people won’t pay the household charge.

      Reply
    • I must say the government have achieved their objective with you anyway . Can you not see the bigger picture ? This is all propaganda by the powers that be .Turn the people on each other ,that will keep their minds away from the REAL issues.
      Oh and why should anyone pay the house tax? We already did when we bought it or are you just a yes man?

      Reply
    • Eileen, I have already decided to leave Ireland. This is on the cards for 2014 when my son finishes university. The government has lost me, my wife and my son. In the meantime, I will work and pay my taxes.
      Older people with tax liabilities should pay their dues.
      If I defaulted, I’d be prosecuted and if found guilty, I’d have to pay all tax owed and about 100% penalty when my name is published in a name and shame campaign.
      Root out all freeloaders and remove the burden from the rest of us.

      Reply
    • Elderly people who have worked all of their lives and provided pensions for themselves are hardly freeloaders . Good luck where ever you go . I wish you all well.
      Did your son get a grant for Uni ? I am just wondering after your comment about ”freeloaders” or did your taxes go towards his education bills ? Were you entitled to claim these grants on his behalf ? Please be careful who you call freeloaders . People with private pensions most certainly are not ”freeloaders” . They must have earned their way to having a private pension. Just as you probably did to gain your son’s education .

      Reply
    • Eileen – if it was a banker who owed back tax I’m sure you would be one of the first to demand that they pay their dues.

      Reply
    • Donal Mc Carthy
      If it was a banker I am sure that person would be well up on the tax laws !!! And we all know how just and honest they are .:)

      Reply
    • Eileen, you would also expect someone who had been around a long time to be up on the tax laws!

      As someone who has seen their tax bill increase a lot in the last few years, I would be very annoyed if I thought the certain classes of people were being let off paying their dues.

      Reply
    • Donal Mc Carthy
      No I do not EXPECT anything any more . We all can not be experts in everything . I think people should pay their dues , I have already said this , but if a pensioner has not, then draw a line and start paying from today. This is a divide and conquer tactic as is the house tax etc…, .

      Reply
    • Donal
      I have paid all my taxes too . As have all my family and colleagues ,friends and parents . What have we to show only more tax bills while the people who never pay tax …..never pay tax.

      Reply
  • The real point here that seems to have been missed by everyone is that Revenue have, over the past few years, been collecting data from 3rd parties that they use to check the accuracy of tax returns. This data from DSP is just the latest file in that regard. Information is also given to Revenue by financial institutions in relation to DIRT for example. Revenue collate all this data so as to surface tax evasion cases. That is what happened here. Pensions are a form of income and become liable to income tax when they exceed tax credits in a tax year. Recipients of pensions from DSP are well aware that this income source has not been subjected to taxation and that the onus is on them to declare it to Revenue where the total income earned in a year exceeds tax credits. We can expect to see more of this type of action by Revenue as they get access to more 3rd party data which allows them challenge inaccurate or under declarations of tax liabilities. This approach by Revenue is common across most tax administrations and is very effective in dealing with tax evasion. The real advantage of this approach is that where Revenue know in advance that tax evasion has occurred, they will impose much higher penalties than they routinely do under tax audit. Tax evaders beware, the net is closing.

    Reply
    • “Tax evaders beware, the net is closing.”

      Of course, we must all contribute to the cost of keeping the central bankers and IMF functionaries in the lifestyle to which they have become accustomed.

      Reply

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