Don't tax their patience

If you missed today's deadline for delivering your tax return, you still have 17 days to file online, but don't leave it to the last minute, writes Caroline Madden

TIME IS ticking for taxpayers who face the annual chore of filing an income tax return. In fact, those persevering with the traditional pen-and-ink approach have only a few hours to go before they miss the October 31st deadline.

However, taxpayers willing to embrace new technology can buy themselves a little breathing space - another 17 days to be precise - by paying their tax and filing their return electronically through the Revenue Online Service (ROS).

Launched in 2000, ROS had some initial teething problems but the system now seems to have been bedded down. Over the years the range of taxes catered for by ROS has been extended to include betting duty, excise duty, employee PAYE, vehicle registration tax and VAT, among others.

As of January 1st, 2009, it will become mandatory for certain large companies and State agencies to pay their taxes and file their returns through ROS.

But for individual taxpayers, the choice between paper and electronic remains theirs.

A dawning realisation of the many advantages offered by e-filing, not least of which is the extended deadline, has resulted in growing numbers of taxpayers eschewing dog-eared paper forms and Tipp-Ex in favour of ROS.

Last year, almost 280,000 income tax returns were received on time through the online service, according to Revenue. This represents a 14 per cent increase on the previous year, and amounts to almost half of the 580,000 people in the self-assessment system (ie those required to file a tax return).

The self-assessment net extends far wider than many people realise. A common misconception is that only self-employed people and company directors have to file income tax returns. In fact, any individual who has income that cannot be fully taxed through the PAYE system falls within the self-assessment net.

For example, a person earning rent from their buy-to-let investment property or receiving dividends from their share portfolio will be required to file a return, as will individuals who receive maintenance from a spouse.

Self-assessed taxpayers hoping to avail of the November 17th extended deadline had better move fast. It is not simply a matter of logging on to ROS, tapping in a few figures and pressing the submit button.

Revenue warns that the three-step registration process takes at least eight days, so anyone who misses today's deadline for paper returns should start this process immediately.

Firstly, the taxpayer must apply for a ROS access number (RAN), which is then posted out to them for security reasons. Once they receive this, they can then apply for a digital certificate. A password will be posted to them, which they use to retrieve their digital certificate, which allows them to access their ROS account.

Can Revenue fast-track this process for taxpayers who find themselves right up against the wire?

Margaret McElroy, ROS marketing manager, says that no guarantees can be made, but advises people in this situation to contact their local ROS liaison officer.

"Each circumstance would be examined individually," McElroy says.

People who registered for ROS in previous years should make sure their digital certificate is activated. The digital certificate is stored on the person's computer.

One mistake sometimes made by ROS customers is getting rid of their old PC or laptop during the year and forgetting to transfer the certificate to their new computer. Unfortunately this means they are right back to square one and will have to go through the lengthy process of getting a digital certificate all over again.

Once their digital certificate is in place and activated, taxpayers will be able to avail of the many advantages that electronic filing holds over handwriting a paper return and praying it does not get lost or delayed in the post.

ROS customers can access their account 24 hours a day, 365 days a year, and save any progress they make in filling out different sections of their online tax return.

One of the most useful aspects of the system is that it provides an instant calculation of the person's income tax and PRSI liability. And instead of waiting weeks for a paper tax return to be processed, online taxpayers will receive an electronic notice of assessment (which shows their tax liability or refund for the tax year in question) in their ROS inbox within five days.

What's more, this notice of assessment is far more likely to be correct than if they had filed a paper return. ROS interfaces directly with the Revenue's computer system, whereas with paper returns, Revenue staff have to manually input the information from the return onto their system and so the margin for clerical error is higher.

Self-assessed taxpayers must remember that, to qualify for the extended deadline, not only must they file their return electronically, but they must also pay their taxes online by November 17th.

The payments due will include the balance of income tax outstanding for 2007, a preliminary tax payment in respect of 2008, and any capital gains tax that may be due on disposals made during the first nine months of 2008.

"Get your payment mechanism in place as soon as possible," McElroy advises.

ROS customers have a choice of three online payment methods.

The first is a Revenue debit instruction (RDI). Unlike a direct debit, this is a once-off payment. "Revenue has given a guarantee that no other payment other than those authorised by the owner of the account will come from that account," she says.

An RDI payment can take a few days to set up, so this should be done well before the deadline.

The alternatives are to pay by laser card or via online banking.

Come November 17th, many procrastinators will no doubt be tapping away furiously on their computers trying to make the deadline (last year 37,000 income tax returns were filed electronically on the last day), but Revenue is confident the website will not get bogged down by the inevitable heavy traffic. McElroy says there are "no capacity issues".

"Stress testing has indicated that there will be no problems this year," she says. Nevertheless, taxpayers should not use this as an excuse to leave everything to the very last minute.

Taxpayers with queries relating to ROS should ring the helpline at 1890-201106. Alternatively, they can contact their local ROS liaison officer (contact details are available on www.ros.ie), who will provide assistance and call out to them if necessary.