# Revenue to target pensioners on higher incomes



## DB74 (6 Jan 2012)

http://www.rte.ie/news/2012/0106/tax.html

Why the uproar about this? If you owe the tax then what is the problem?

If Revenue, and the State in general, concentrated resources on issues like this, we wouldn't have to pay things like the household charge


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## callybags (6 Jan 2012)

What part of "Self Assessment" do they not understand?

Why were the likes of Age Action not advising pensioners on their tax obligations?

Is this not why they were set up in the first place?


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## Shawady (6 Jan 2012)

DB74 said:


> Why the uproar about this?


 
Because if any spending cuts/tax increase affects older people, you are targeting "the most vulnerable in society".
Age Action Ireland have already said it will cause further hardship of older people. How predictable.

I've no doubt there are many pensioners that what not aware they were not meeting the tax obligations, but if it has to be paid, it has to be paid.


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## Sunny (6 Jan 2012)

I don't think there is uproar. There is a genuine confusion out there among older people who are probably only hearing about this for the first time. Not sure why Revenue or Social Welfare couldn't have launched a PR campaign to advise people of their obligations last year before sending out letters and cutting people's credits on the 01st January.

To be honest, I didn't know the State Pension was included in taxable income when in receipt of a private pension.  

As for the sharing of information, about bloody time. Now, if we could the same with Child benefit and tax that, I would be happy.


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## Protocol (6 Jan 2012)

Sunny,

what I always say is simple - "all income is taxable".


NB: there are actually some exclusions, but the easiest place to start is to assume that ALL income is taxable.

State Pensions are taxable.


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## Purple (6 Jan 2012)

I agree wit Sunny's points.
I'll be very disappointed if they don't backdate this though.


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## DB74 (6 Jan 2012)

Apparently (didn't hear it myself) there was a woman on to "Joe" claiming that, due to the changes, pensioners are being discriminated against because their 20% tax band and tax credits are being reduced unfairly

This is totally untrue and merely shows a lack of understanding in the tax system

eg - married couple with State pension of €10K each and other pension of €50K

At the moment, without the adjustment, their PAYE is

€50,000 x 20% = €10,000 minus tax credits of €6,600 = PAYE paid of €3,400

Total take home income  = €66,600 (€70K less tax of €3,400)


The correct PAYE payable should be

€65,600 @ 20% = €13,120
€4,400 @ 41% = €1,804
Total = €14,924
less Tax Credits of €6,600
Total PAYE payable = €8,324

Total take home income = €61,676


However, unless Revenue start taxing State Pension at source, the only way to ensure that people pay the correct tax is to adjust their PAYE cut-offs & credits

So by reducing their cut-off by the amount of State Pension received, the correct PAYE is paid on the non-State pension

eg - 

reduce 20% band by the €20,000 State pension received
reduce tax credits by 20% of the amount of State Pension 

Now non-State pension =

€45,600 @ 20 = €9,120
Balance @ 41% = €1,804
Total = €10,924
less Tax Credits = €6,600 less €4,000 (€20K @ 20%) = €2,600
Total PAYE payable = €8,324

Total take home pay = €61,676 which is the same as the correct amount calculated above


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## Joe_90 (6 Jan 2012)

@DB74 Well Said.

The issue should be why the dept of Finance/Rev. Commissioners and Dept of Social Protection did not do this years ago.


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## Leaky1 (6 Jan 2012)

Purple said:


> I agree wit Sunny's points.
> I'll be very disappointed if they don't backdate this though.



There will be murder if they backdate this to look at prior years!

 If Age Action are that aggrieved by this they should look at themselves and ask why they weren't informing their customers of what is and isn't taxable. The income is taxable where there is other taxable sources of income - that's not a new development.

I can understand why it's a shock to a lot of people to open the letter and read that you have a potential liability. But, there are pensioners out there who have been declaring and paying tax on it through their Form12 (or reduced tax credits) each year so it is only fair to catch up with the ones who haven't been paying until now. This isn't unfair, it's just making it fairer.

I felt the headlines on some of the evening papers were fairly irresponsible at scare-mongering: I saw one along the lines of "Revenue to hit 115,000 pensioners with €8800 tax bill". For starters, by saying 'bills' they are suggesting that the money is to be colleced in a lumpsum - there are no bills, it will simply be done weekly/monthly through payroll. Second, that level of tax would be paid by a couple who are liable at 41% as they had BOTH exhausted their 20% rateband - so they could have combined private pensions of up to €65,600 before receiving a State pension each. I just felt that headline would scare the life out of a pensioner who is on a small private pension and a State pension, thinking they were going to have to find €8800!


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## Purple (7 Jan 2012)

Leaky1 said:


> There will be murder if they backdate this to look at prior years!



Pensioners as a group have, over the last few years, shown themselves to be the most selfish and self-serving group in Irish society. 
I have been given to here before for describing the pensioners who protested outside the Dail when the medical card was removed from over 70’s earning more than €1’350 a week as “scum” but my opinion hasn’t changed. 
If the government said that Taxi drivers had been under paying their income tax for years but they weren’t going to back date it because they didn’t do it on purpose there would be uproar. Why doesn’t the same apply for pensioners on good incomes? If they are part of the nebulous but ever growing group called “The Most Vulnerable in Society” (could we just use “MVS” in future?) then they won’t be liable for anything because they won’t be earning enough.  
The “Theirs is the generation that built the country” line also fails when held up to scrutiny. The generation now retired is the generation who covered up sexual abuse, allowed the economy to overheat, saw us drop down almost every league table that mattered from literacy to numeracy to productivity and up the ones that we didn’t want to be on like obesity and indebtedness. They made their good decisions and their bad decisions. In short they are no better or worse than my generation or the one coming after me. We don’t have a generation that fought the Second World War, we don’t have that Golden generation, so stop the misty-eyed drivel. Anyway, being a decent skin, a morally upstanding member of society and an all-round good person doesn’t allow you to evade tax.


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## oldnick (7 Jan 2012)

For some strange reason the older I get the more I sympathise with pensioners.....

... though  God(figure of speech) help me if I'm as thick as some of the ones i've seen recently on TV looking bewildered and angry at the idea of having to pay tax on their income. 

Seems there's need for an organisation to represent intelligent, dynamic and highly attractive old people like me instead of the dodos that so many of my fellow-OAPs appear to be.

Mind you,  I am aware that all too quickly one kan loosh  wuns mentel faku
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## callybags (7 Jan 2012)

Purple said:


> Pensioners as a group have, over the last few years, shown themselves to be the most selfish and self-serving group in Irish society.
> I have been given to here before for describing the pensioners who protested outside the Dail when the medical card was removed from over 70’s earning more than €1’350 a week as “scum” but my opinion hasn’t changed.
> If the government said that Taxi drivers had been under paying their income tax for years but they weren’t going to back date it because they didn’t do it on purpose there would be uproar. Why doesn’t the same apply for pensioners on good incomes? If they are part of the nebulous but ever growing group called “The Most Vulnerable in Society” (could we just use “MVS” in future?) then they won’t be liable for anything because they won’t be earning enough.
> The “Theirs is the generation that built the country” line also fails when held up to scrutiny. The generation now retired is the generation who covered up sexual abuse, allowed the economy to overheat, saw us drop down almost every league table that mattered from literacy to numeracy to productivity and up the ones that we didn’t want to be on like obesity and indebtedness. They made their good decisions and their bad decisions. In short they are no better or worse than my generation or the one coming after me. We don’t have a generation that fought the Second World War, we don’t have that Golden generation, so stop the misty-eyed drivel. Anyway, being a decent skin, a morally upstanding member of society and an all-round good person doesn’t allow you to evade tax.




Purple
I agree with the main points in your post; pensioners should not be treated and different regarding tax arrears.

However I think you are far too liberal with generalizations regarding their " generation" and what they allegedly have done.

My parents are of this generation and I immediately thought that they would be horrified to read your post.


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## Purple (7 Jan 2012)

callybags said:


> Purple
> I agree with the main points in your post; pensioners should not be treated and different regarding tax arrears.
> 
> However I think you are far too liberal with generalizations regarding their " generation" and what they allegedly have done.
> ...


 

My parents are of that generation as well. I can't see any evidence that their generation is any better than the one that came after them. In fact I think the one that came after them (my generation) is better adjusted, more liberal, less tolerant of crime and gombeenism, more educated and just as hard working. I suspect that the one coming after me will be better again.


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## callybags (7 Jan 2012)

My problem is your use of the term "generation" as if they acted in unison.

All the bad things that happened- child abuse and the cover ups, corruption  etc. were effected by individuals making conscious decisions and cannot be attributed to a general group.


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## Purple (7 Jan 2012)

callybags said:


> My problem is your use of the term "generation" as if they acted in unison.
> 
> All the bad things that happened- child abuse and the cover ups, corruption  etc. were effected by individuals making conscious decisions and cannot be attributed to a general group.



I'm just pointing out that pensioners aren't some group to which we all own a debt of some sort. This is especially the case if you work in the Public Sector where the debt is owed by the pensioners to those who are being bled to pay for their pensions.


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## callybags (7 Jan 2012)

Purple said:


> I'm just pointing out that pensioners aren't some group to which we all own a debt of some sort. This is especially the case if you work in the Public Sector where the debt is owed by the pensioners to those who are being bled to pay for their pensions.



Fully agree.


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## Deiseblue (7 Jan 2012)

Purple said:


> I'm just pointing out that pensioners aren't some group to which we all own a debt of some sort. This is especially the case if you work in the Public Sector where the debt is owed by the pensioners to those who are being bled to pay for their pensions.



It should be pointed out that Public Sector pensioners are unlikely to be effected by the policy that the current Government are correctly pursuing in ensuring that all pensioners are tax compliant.

I believe I am correct in stating that pre 1995 Public Sector employees cannot claim the State Old Age Pension & as such their pensions are being correctly taxed at source by their previous employer & in reality they did not have the opportunity to evade tax either by accident or design in not declaring income from an occupational pension & a State pension.


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## Protocol (7 Jan 2012)

DeiseBlue, that assumes they worked in PS all their lives and only paid PRSI class D.

If so, then yes, they won't get a PRSI pension.


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## Deiseblue (7 Jan 2012)

Protocol said:


> DeiseBlue, that assumes they worked in PS all their lives and only paid PRSI class D.
> 
> If so, then yes, they won't get a PRSI pension.



Thanks for that.

I presume it's fair to say that typically pre 1995 Public Sector employees will not receive any State OAP but will simply receive an occupational pension ?


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## Purple (7 Jan 2012)

Deiseblue said:


> Thanks for that.
> 
> I presume it's fair to say that typically pre 1995 Public Sector employees will not receive any State OAP but will simply receive an occupational pension ?



I agree. It's still a state funded pension though the state is dipping its hand into current public sector employees pockets to make sure that said retirees don't take any pain.


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## Slim (7 Jan 2012)

Purple said:


> I agree. It's still a state funded pension though the state is dipping its hand into current public sector employees pockets to make sure that said retirees don't take any pain.


Retired Public servants have taken cuts as well. This week's exercise by Revenue was a bit heavy handed and a blunt instrument, causing unnecessary distress to a lot of older people who are, in fact, tax compliant.

Isn't it time the Revenue and Department of Social Protection were amalgamated?


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## Deiseblue (7 Jan 2012)

Purple said:


> I agree. It's still a state funded pension though the state is dipping its hand into current public sector employees pockets to make sure that said retirees don't take any pain.


.

Weren't Public Sector pensions over 12,000 per annum cut in 2011's budget - many PS pensioners will therefore have experienced financial pain.

The range of cuts were 6% , 9% & 12% - pretty painful I would have thought ?


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## putsch (7 Jan 2012)

Small contribution from personal experience. It looks from the letter as if my 90 year old dementia suffering Mum is regarded as non-compliant - however the revenue already knew about her private Irish Life pension and her SW widow's pension and had both taken into account in her tax credit for ever.....The only change looks like they may have underestimated the state pension by a few bob giving rise to a euro or two less on her tax credit. Mind you I find the while thing rather confusing as the tax system is way too complex for me since they moved to tax credits.

I suspect she is not alone and we are not talking about 1,000's of OAPs who thought they shouldn't pay tax on SW pension if they had private one but rather that Revenue got the amount of the SW pension slightly wrong.


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## x4winnie (7 Jan 2012)

i think what people are complaining about here is not that some pensioners owe tax. My main complaint is that out of the blue on 5 January 2012 elderly people like my 85 year old, widowed, mum in law got a letter implying she dishonestly withheld information from revenue. She gets state widows contributary pension and a private pension of 3k euro per annum, total income about 15k total per annum. On Friday morning she got this notice in the post and worried herself sick all day, she thought she was the only one who got the letter.

Of course she does not owe tax, but she still got the notice, I think a fishing exercise of anyone who: 1) is getting state and a private pension, 2) has not had contact with the revenue for many years.

Sneaky? nasty... no leaks ? no notice? many many old people who never owed anyone a penny in their lives, were terrified. A leak to either radio or newspapers or a proper notice in newspapers would have been sufficient ....shame on the revenue. Shame on our new government.


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## rayn (7 Jan 2012)

What about the 100,000 pensioners who have been paying their correct Tax over the past years.
Will we now get it back and just start in 2012?
All arrears should be paid.


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## Megan (8 Jan 2012)

rayn said:


> What about the 100,000 pensioners who have been paying their correct Tax over the past years.
> Will we now get it back and just start in 2012?
> All arrears should be paid.



A member of my family who is self employed and is in receipt of OAP.
He fills out an 11E form every year and includes his self employement income, OAP and small private pension yet he received one of these letters saying that he hadn't told revenue about his OAP. It is great that Social Welfare and Revenue are sharing info now but I wonder if there are some revenue departments not sharing information. If they were my family member wouldn't have got this letter because his Income Tax is fully up to date as of 31st October 2011. He will phoned them on Monday and I wouldn't like to be at the other end of the line taking that call.


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## oldnick (8 Jan 2012)

Re Megans post -and others . If ,really, people like Megan's relative fully disclosed all sources of income and yet Revenue made the accusation - or even suggestion -that they owed tax/ had evaded tax  then some Revenue heads should roll.

However, we know that in Ireland public servants can act negligently, make enormous errors, cause great distress due to foul-ups  -and nothing happens.


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## blueband (8 Jan 2012)

Purple said:


> My parents are of that generation as well. I can't see any evidence that their generation is any better than the one that came after them. In fact I think the one that came after them (my generation) is better adjusted, more liberal, less tolerant of crime and gombeenism, more educated and just as hard working. I suspect that the one coming after me will be better again.


so by your thinking in about 100 years time we should be breeding a generation of superheros! or looking back..the generations that fught and died for our freedom and independence,,,,,which this generation has handed over to our EU slavemasters! were in some way less better that us!............strange way of looking at things!


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## browtal (8 Jan 2012)

Purple,
I wonder if you have considered many of the people who received these notices to whom they should not have been sent.

1. Many received this notice and they are not liable to any additional tax.
2. People who have turned 66 yrs and are in recepit of State Pension for the first 
time. They would be expected to make tax returns now, not last year.
3. Couples who have been in receipt of a State Pension for one party and this 
year become elegible for the second party to get their pension. Again they 
would be making a tax return shortly.
4. People who do not understand the tax system and think they are paying their 
tax.
I understand that we pay large salaries to PR staff, now *above the government* *agreed sealing* because many of these *PR people are overqualified*.

I would seriously *question the expertise of the PR people* who sent out these notices, in the form in which they did, which caused worry and upset to many people who should not have received them.
I hope when you reach the age of many of these Older People, some over 90 yrs, you will be able to take on board the many changes that occur in the 24 yrs since you reached retirement age and make adequate returns.

Recent research shows that at about 40 years of age we start to lose some memory capacity. Most older people will agree with these findings.
I think you are *not very understanding of the Older People in society*. This generation have improved the world into which you were born. Look at the standard of eduction that exist today. When many *Younger Irish People emigrate* today they do not have to work in unskilled jobs, but *can compete with the best* in any country. Look at the position of women in society today. I could go on.

My parents worked very hard, much harder than my generation and made the foundation of our country more sound. 
*Many of The generation of the celtic tiger cannot lay claim to the same.* If you have special expertise I hope you might make some time to volunteer your services to one of the many agencies seeking volunteers today to make our country a better place in which to grow Old. 
The services to which Older People have contributed all their lives are being eroded. It is like double taxation. 
Currently we are all *entitled to a public bed* in a *public hospital* for which *we pay in our tax*. If this service was available in a timely manner, many would not have to pay for Private health ins.
Now this year the subsidy which we would have received for our payments have been removed and we must pay the full economic cost of our Private Beds and still pay the health contribution. For what? 
Surely if we pay for private Health care and get no state benefit, we *should not have to pay the Health subsidy*.
Browtal


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## Black Sheep (8 Jan 2012)

I hope the Revenue and the Media will publish the figures for the numbers of unnesessary scary letters which were sent out to fully tax compliant people.

 While I believe that everyone should pay their taxes on an equal basis regardless of age or familiarity with tax system, it is therefore appauling that those who are fully compliant should get a letter from revenue suggesting otherwise


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## Threadser (9 Jan 2012)

My 87 year old demetia suffering mother has been credited with a trading profit of €250 in the latest correspondence from the Revenue. She has been resident in a nursing home for 3 years now, but she ran a bed and breakfast business over 20 years ago and unbelievably Revenue has decided that she is still making a profit from it! You couldn't make this stuff up....


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## dewdrop (9 Jan 2012)

As an old age pensioner myself i am somewhat amused at the suggestion that some pensioners thought tax was being deducted from their state pension or that Revenue should have been aware of it.  These folk were well aware of the Medical Card implications when they took to the streets some time ago.  Frankly many just chanced they would get away with it. I, of course, fully understand the worry and upset some may have endured but i feel this has received undue publicity rather than focusing on those who have evaded tax.


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## Bronte (9 Jan 2012)

Is it legal for revenue to not back date the tax plus penalties and interest?


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## Megan (9 Jan 2012)

Bronte said:


> Is it legal for revenue to not back date the tax plus penalties and interest?



As an add on to this question: if they don't back date it will those that have paid their tax on their OAP get a refund ?


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## csirl (10 Jan 2012)

> Of course she does not owe tax, but she still got the notice, I think a fishing exercise of anyone who: 1) is getting state and a private pension, 2) has not had contact with the revenue for many years.


 
My father got the letters even though he makes an annual tax return which usually results in him getting a refund. He got the generic letter re: increased tax liabilities if you have 2 pensions plus the second letter with the credit details etc. Second letter had all his income (State pension and small occupational pension) included. 

I would fully agree that the letters are badly worded. The first letter gives the impression that its a tax demand, however, the second letter confirms all the details are in order and no additional tax is due which is contradictory. (actually looks like he'll be getting a refund again).

However, I think this has all been very beneficial - there is much greater awareness among pensioners of the need to make annual tax returns. Maybe the person who worded the letters is a PR genius - the uproar has certainly got the message across.


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## DB74 (10 Jan 2012)

csirl said:


> However, I think this has all been very beneficial - there is much greater awareness among pensioners of the need to make annual tax returns.



As well as greater awareness of the heavy-handedness of Revenue over the last 2-3 years




csirl said:


> Maybe the person who worded the letters is a PR genius - the uproar has certainly got the message across.



They should get a promotion or a raise?

Ah to hell with it, give everyone a raise!


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## mandelbrot (10 Jan 2012)

DB74 said:


> As well as greater awareness of the heavy-handedness of Revenue over the last 2-3 years


 
Out of curiosity, if you were Josephine Feehily for the last 2 - 3 years, with the pressure on to ensure that compliance (and hence the tax take) is maximised, what would you have done differently?


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## mandelbrot (10 Jan 2012)

DB74 said:


> They should get a promotion or a raise?
> 
> Ah to hell with it, give everyone a raise!


 
Who's been getting a raise?


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## DB74 (10 Jan 2012)

mandelbrot said:


> Out of curiosity, if you were Josephine Feehily for the last 2 - 3 years, with the pressure on to ensure that compliance (and hence the tax take) is maximised, what would you have done differently?



Yeah I appreciate that Revenue are under pressure to maximise the tax take and all that but they seem to be concentrating on squeezing taxpayers who are generally compliant for a few extra euro as opposed to chasing people who are less compliant

I mean, we get letters in for clients who haven't paid any prelim tax for 2011 or 2012 or whenever (usually cos it's NIL anyway) and then you have guys who haven't sent in a tax return for 2-3 years and they never get any letters!

Another example is the surcharge on directors for late submission of Income Tax returns, which is ridiculously punitive


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## mandelbrot (10 Jan 2012)

DB74 said:


> Yeah I appreciate that Revenue are under pressure to maximise the tax take and all that but they seem to be concentrating on squeezing taxpayers who are generally compliant for a few extra euro as opposed to chasing people who are less compliant
> 
> I mean, we get letters in for clients who haven't paid any prelim tax for 2011 or 2012 or whenever (usually cos it's NIL anyway) and then you have guys who haven't sent in a tax return for 2-3 years and they never get any letters!
> 
> Another example is the surcharge on directors for late submission of Income Tax returns, which is ridiculously punitive


 
You're talking about two different compliance areas there though - the first being compliance with payments, the second being returns compliance. If they were writing to non-filers about nil preliminary tax you'd be saying, why waste the paper and the postage, since if they haven't filed returns they're hardly going to pay preliminary tax!

The letter the non-filers get will be a letter to warn that prosecution is imminent, and since there's much more work involved in obtaining a prosecution, even a summary one, it's reasonable to expect that these letters will be fewer and further between than the letter to remind people of their pay & file obligations...

Agree with you about the surcharge on directors where income is PAYE only, particularly where there would otherwise be no net liability.

I don't think it's about squeezing taxpayers who are generally compliant for a few extra quid; it's that they're trying to ensure compliance across the board, but it's easier to interact with people who are engaging with you. So they can check on say 10 or 20 relatively compliant people with the same amount of resources as it might take to track down and force compliance / prosecute one non-compliant taxpayer.


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## T McGibney (10 Jan 2012)

mandelbrot said:


> Agree with you about the surcharge on directors where income is PAYE only, particularly where there would otherwise be no net liability.



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.


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## mandelbrot (10 Jan 2012)

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


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## x4winnie (10 Jan 2012)

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.


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## x4winnie (10 Jan 2012)

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.


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## Ann1 (10 Jan 2012)

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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## Megan (11 Jan 2012)

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.



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.


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## mandelbrot (11 Jan 2012)

Megan said:


> 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!


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## dewdrop (11 Jan 2012)

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.


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## ClubMan (11 Jan 2012)

mandelbrot said:


> 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...


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.


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## mandelbrot (11 Jan 2012)

ClubMan said:


> 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 head 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...


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## ClubMan (11 Jan 2012)

mandelbrot said:


> Don't get me wrong, it certainly should have been flagged in advance


_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.


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## potnoodler (11 Jan 2012)

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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## Joe_90 (11 Jan 2012)

+1


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## mandelbrot (11 Jan 2012)

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



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...


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## putsch (11 Jan 2012)

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!


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## mandelbrot (12 Jan 2012)

putsch said:


> 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 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.


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## Bronte (12 Jan 2012)

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.


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## mandelbrot (12 Jan 2012)

Bronte said:


> 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.


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## dave28 (12 Jan 2012)

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 ?


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## T McGibney (12 Jan 2012)

dave28 said:


> Revenue and Social Protection have a lot of work to do with their records



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.


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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