IRD systems archaic, taxpayers victimised
View(s):I am a tax practitioner running an audit firm, in operation for over 20 years. The Department of Inland Revenue (IRD) has very recently adopted the most extreme tax recovery measure of seizing tax-payer’s bank accounts, based on the taxes in default reported by the IRD system. This was confirmed to me by a bank manager who stated that he has received a spate of such notices within this past week.
While there is a crying need for recovery of default taxes, the plain truth is that the overwhelming majority of the taxes reported as outstanding in the IRD system is incorrect, for various reasons such as:
- Credit not given for payments correctly
- Settlements reached with IRD not updated in the system
- Penalties negotiated with Commissioner not updated in the system
- Payments allocated to incorrect periods
- Relief available in the tax legislation not able to be granted, due to system limitations (for example, although dividend tax that can be set off against ESC credit, such set off is not recognized in the system)
As an example, my client’s bank accounts were seized to the tune of Rs. 17 million, without any prior notice whereas in actual fact, not a cent was in default, as confirmed by the assessor herself, when issuing the withdrawal letter to the banks.
Such incorrect bank seizures have the following effect on the taxpayer
- Mental anguish
- Waste of time and money in coming to the IRD and proving that all taxes have been paid
- Crippling of business as bank accounts cannot be operated
- Loss of face with banks and suppliers (s cheques are returned by the bank)
We kindly request the IRD to cease the practice of seizing bank accounts, based on incorrect information, which will eventually lead to disgruntled and disillusioned tax-payers, counter-productive to the IRD’s vision of being a “tax-payers, friendly tax administrator”.
Instead, we call on the IRD to engage proactively with the tax-payer, and treat them as partners in the development of the nation as opposed to treating them as rogues and crooks, which sadly is the present attitude of the majority of the officials of the department.
Disgruntled Tax Consultant
Colombo