Revenue apologises over pension letter controversy

Wed, Jan 11, 2012, 00:00

The chair of the Revenue Commissioner Josephine Feehily has apologised before an Oireachtas committee following the recent controversy over letters sent to pensioners.

Ms Feehily said the Revenue would review its communication strategy and learn from what had happened.

“We caused confusion and distress to some people and I’m sincerely sorry for that,” Ms Feehily said.

In the course of the three-hour meeting, Ms Feehily revealed that 35,000 phonecalls had been made to Revenue and there had also been 20,000 “walk-in” callers since last Thursday.

She said €60,000 had been spent on postage and paper for the 150,000 letters that were sent to pensioners.

Ms Feehily said it was also too early to determine the scale of the impact on about 115,000 pensioners who have either under-declared or who have not at all reported their pension payments. “The range and complexity of these records makes it impossible to give a simple answer and we need to understand it better,” she said.

But a random sample suggests previously untaxed income in some cases could be as much as €18,000, while more than a third were liable to pay tax on an extra €2,000.

Revenue has come under attack from organisations representing older people for their handling of the fall-out, which emerged after updated records from the Department of Social Protection were sent to the tax-collectors.

Worried pensioners who have not been contacted are continuing to call Revenue about their tax liabilities, said Ms Feehily. But she said there was no further tranche of letters to go out and those who had not received one need not worry.

“I can say to those who did not get a letter that you should not be concerned,” she said.

Revenue asked the Department of Social Protection for updated information on pension payments last year, which they received on December 1st. There was no immediate issue with three quarters of all cases, while another 100,000 people are expected to return their records through the self assessment system as normal next October.

But when they compared the files with their own records, Revenue found mismatches in 150,000 cases taxed through the PAYE system.

Ms Feehily said they had to take immediate action to make sure arrears did not build up for the taxpayers.
She said “tailored letters” were sent out to four separate groups.

These included 20,000 people who were paying too much tax, 30,000 people who had never reported their pension to Revenue and 85,000 people who had under-reported their pension or whose circumstances had changed.

There were also 15,000 pensioners who had not reported their State payments but had no tax liability.

Ms Feehily said they decided to send out letters because a large scale announcement about mismatches in the tax records would have sparked even more wide scale upset.

Of the 20,000 pensioners who may be due money back for last year, Ms Feehily said Revenue will process their claims as soon as they get their P35 details. Revised tax credit certificates will be issued in the coming weeks for the 15,000 pensioners thought to be tax exempt.

Confusion remains over the remaining 115,000 cases. Ms Feehily said she will not be in a position to clarify this until well into the year.

Revenue has carried out a small random sample of 51 pensioners who got letters, which showed Revenue owed them money in four cases. In 14 cases, the recipients never told Revenue about their pension payments, while in 33 cases the amount of their pension was understated for various reasons.

The amount of income not taxed in those cases ranged from 20 cent to €17,820.

More than a third, 19 cases, involved an extra €2,000 taxable income that Revenue did not know about.

Ms Feehily said Revenue will start by examining in detail 2,500 of the largest cases - where the taxpayers have a non-State income of €50,000 or more a year. She said she did not expect penalties and interest to happen in many cases.

Representatives from Age Action met  Revenue officials this morning.  In what was described as a "productive  meeting", the charity is to help design a public campaign which will inform pensioners of the details Revenue need from them about their changing life circumstances in order to accurately assess their tax liability.

“What is clear from the controversy over the last week after 115,000 letters were sent by the Revenue to pensioners claiming they had a tax liability, is that there is a lot of misunderstanding and a lack of accurate information about what older people have to do to remain tax compliant,” said Age Action spokesman Eamon Timmins.

The Irish Senior Citizens Parliament said there had been a “full and frank exchange” of views when representatives met two Revenue officials yesterday. It said Revenue had not provided the level of detail it had hoped to receive and they hoped there would be more information available at today’s Oireachtas committee meeting.

Additional reporting: PA