Distress over ATO letters : tax debts may be decades old
Nov 27, 2023 6:36:44 GMT 7
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Post by bear on Nov 27, 2023 6:36:44 GMT 7
Distress and confusion at ATO letters warning of ‘on-hold’ tax debts that may be decades old
Recipients say it is nearly impossible to contest alleged debts, which tax office says will be taken out of future refunds
Thousands of Australians are being advised they have “on-hold” tax debts – ranging from a few cents to thousands of dollars – that may be decades old and will be taken from future refunds.
The Australian Taxation Office letters are causing distress to recipients, who have told Guardian Australia that they are near impossible to contest given many alleged debts predate the five-year retention period most taxpayers are required to keep records.
Paul Holmes, a 63-year-old retiree in NSW, said he had interpreted the ATO letter as a warning.
“It’s a threat that at some point in time they will come and collect the debt,” Holmes said. “Does that mean debt collectors will come to my door?”
On-hold debts refer to amounts the ATO deem to be owing but uneconomical to pursue.
Several recipients, including Holmes, said they were never made aware of the outstanding debt until receiving the letter. Others said they had previously been told the debts had been “written off”.
See letter in link:-The letter Paul Holmes, 63, received from the ATO warning him of a $178 'on-hold' debt
Holmes’ letter advises he has a $178 on-hold debt. He said after making phone inquiries, he was told by an ATO representative it referred to an outstanding amount from 2007, when he was working in the mining services sector.
“I don’t believe I owe anything. I’ve always paid my taxes,” he said.
The boilerplate ATO letters provide payment details for those wanting to clear the debt. It also advises that while it isn’t taking active steps to collect the debts, “the law requires us to use any tax refunds or credits you become entitled to, to pay off the debt, except in limited circumstances”.
An ATO spokesperson said the agency wrote to about 28,000 tax agents to provide them with a list of their clients who have an on-hold debt.
“We are now sending awareness letters directly to remind clients of the debts on hold and how to view their debts on ATO online,” the spokesperson said.
“Providing visibility of these amounts helps clients understand that these debts remain legally payable, even though the ATO isn’t currently taking active steps to recover them.”
The spokesperson said the agency had no legal discretion to write the amounts off and that the tax office must use any future refund to reclaim the outstanding amounts, no matter how small.
While some of the amounts owing are less than the cost of postage, others run into the thousands of dollars, according to letters viewed by Guardian Australia.
‘We don’t know the circumstances’
Gail Freeman, a veteran Canberra accountant, said she had been advised that 20 clients had on-hold debts, including two clients who apparently owe 5c each.
Freeman said one of her clients had an on-hold debt dating back to 2001.
“Suddenly, 22 years later, it resurfaces, which isn’t OK by me,” Freeman said.
“We don’t even know how it arose and why it’s there. If it was a genuine debt, I’m happy to help but we don’t know the circumstances.”
The debts will put many people in a difficult situation of having to weigh the cost of accepting it, paying it off or contesting it, which could require engaging a tax agent and trying to resurrect old files.
The on-hold debts are scheduled to start appearing on a person’s online tax files from April next year.
“The one thing I know from having been in this industry a long time is that people get upset when they are told they have a tax debt because they believe they’ve done the right thing and paid it off every year,” Freeman said.
“Most of my clients would be really unhappy if their name was on this list.”
www.theguardian.com/australia-news/2023/nov/27/distress-and-confusion-at-ato-letters-warning-of-on-hold-tax-debts-from-decades-ago
Recipients say it is nearly impossible to contest alleged debts, which tax office says will be taken out of future refunds
Thousands of Australians are being advised they have “on-hold” tax debts – ranging from a few cents to thousands of dollars – that may be decades old and will be taken from future refunds.
The Australian Taxation Office letters are causing distress to recipients, who have told Guardian Australia that they are near impossible to contest given many alleged debts predate the five-year retention period most taxpayers are required to keep records.
Paul Holmes, a 63-year-old retiree in NSW, said he had interpreted the ATO letter as a warning.
“It’s a threat that at some point in time they will come and collect the debt,” Holmes said. “Does that mean debt collectors will come to my door?”
On-hold debts refer to amounts the ATO deem to be owing but uneconomical to pursue.
Several recipients, including Holmes, said they were never made aware of the outstanding debt until receiving the letter. Others said they had previously been told the debts had been “written off”.
See letter in link:-The letter Paul Holmes, 63, received from the ATO warning him of a $178 'on-hold' debt
Holmes’ letter advises he has a $178 on-hold debt. He said after making phone inquiries, he was told by an ATO representative it referred to an outstanding amount from 2007, when he was working in the mining services sector.
“I don’t believe I owe anything. I’ve always paid my taxes,” he said.
The boilerplate ATO letters provide payment details for those wanting to clear the debt. It also advises that while it isn’t taking active steps to collect the debts, “the law requires us to use any tax refunds or credits you become entitled to, to pay off the debt, except in limited circumstances”.
An ATO spokesperson said the agency wrote to about 28,000 tax agents to provide them with a list of their clients who have an on-hold debt.
“We are now sending awareness letters directly to remind clients of the debts on hold and how to view their debts on ATO online,” the spokesperson said.
“Providing visibility of these amounts helps clients understand that these debts remain legally payable, even though the ATO isn’t currently taking active steps to recover them.”
The spokesperson said the agency had no legal discretion to write the amounts off and that the tax office must use any future refund to reclaim the outstanding amounts, no matter how small.
While some of the amounts owing are less than the cost of postage, others run into the thousands of dollars, according to letters viewed by Guardian Australia.
‘We don’t know the circumstances’
Gail Freeman, a veteran Canberra accountant, said she had been advised that 20 clients had on-hold debts, including two clients who apparently owe 5c each.
Freeman said one of her clients had an on-hold debt dating back to 2001.
“Suddenly, 22 years later, it resurfaces, which isn’t OK by me,” Freeman said.
“We don’t even know how it arose and why it’s there. If it was a genuine debt, I’m happy to help but we don’t know the circumstances.”
The debts will put many people in a difficult situation of having to weigh the cost of accepting it, paying it off or contesting it, which could require engaging a tax agent and trying to resurrect old files.
The on-hold debts are scheduled to start appearing on a person’s online tax files from April next year.
“The one thing I know from having been in this industry a long time is that people get upset when they are told they have a tax debt because they believe they’ve done the right thing and paid it off every year,” Freeman said.
“Most of my clients would be really unhappy if their name was on this list.”
www.theguardian.com/australia-news/2023/nov/27/distress-and-confusion-at-ato-letters-warning-of-on-hold-tax-debts-from-decades-ago
