Extension of time arrangements for 2012 returns

Extension of time arrangement

• Introduction to EOT
• EOT filing guidelines and dates
• Standard, E-File and late balance dates
• Negotiated filing dates - genuine reasons
• Return filing and performance
• Interim performance
• Filing problems - L letter and D status
• Supervised EOT
• Withdrawing a tax agent's EOT
• List maintenance
• Administration
• Reports
• Legislation relating to EOT

Introduction to EOT

For various reasons, clients of tax agents are allowed an extension of time (EOT) in which to file their income tax returns. Guidelines are set each year to help you manage your return filing to meet the required 100% of clients' returns filed by 31 March.

EOT filing guidelines and dates

Two sets of interim dates are provided each year:

• standard, E-File and late balance dates
• negotiated filing dates.

The dates specify the percentage of returns that must be filed throughout the year. Each set requires 100% of clients' returns to be filed by 31 March 2013. If some returns can't be filed by 31 March the agreement sets out how these will be managed.

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Standard, E-File and late balance dates

If you're not eligible for late balance dates or haven't negotiated personal dates, the standard interim dates apply as your guidelines.

The standard interim dates to be used as a guide are:

• 40% of clients' returns filed by 14 September 2012
• 60% of clients' returns filed by 9 November 2012
• 80% of clients' returns filed by 8 February 2013.

These dates are to help you meet the requirement to file 100% of clients' returns by 31 March 2013.

Exceptions to filing dates

Different rules apply to new clients who have returns outstanding for two or more years as they aren't entitled to an automatic EOT for the current year.

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Negotiated filing dates - genuine reasons

If you failed to achieve at least 85% of returns filed as at 31 March 2012 you'll have received a caution and your agent account manager will be supervising your EOT arrangement for the 31 March 2013 return filing year. Supervision may include negotiating interim dates that better suit your business. These will be agreed with your agent account manager or Large Enterprises account manager based on your business plan to file 100% by 31 March 2013 and monitored through the year.

There may be other situations when there are genuine reasons why you won't meet an interim percentage.

Sometimes this is because of your client list profile and the complexity of the work undertaken, or because a significant number of returns are dependent on late information. The authority to negotiate filing dates lies with our agent account managers and Large Enterprises account managers.

Other reasons may include business or personal problems, such as illness, death of a partner, takeover of a new business with a poor filing performance, or computer system failure.

We can't negotiate the date for the final requirement of 100% as we're constrained by section 37(5) of the Tax Administration Act 1994 (TAA).

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Return filing and performance

Tools and services are available to help you meet 100% filing each 31 March. E-Filing, L letters and D status are among these.

E-Filing

An E-File software package is available, making it possible for your agency to file most returns directly from your computer to ours.

E-File software is specific to your agency’s IRD number. If for any reason your agency’s IRD number changes, the software package must be updated.

When returns are E-Filed without the software being updated with the new IRD number, your clients will be delinked from the agency as you file their returns and they’ll also receive letters telling them they’ve been removed from your client list. E-Filing the return may not result in the client being automatically linked to the new IRD number.

When the software is updated with the new IRD number, and you’ve requested a bulk transfer of clients to the new number, it’s important that no returns are E-Filed on the updated software until the bulk transfer has been successfully completed. Your account manager will let you know when the bulk transfer of your client base has been completed so you can E-File again using the new IRD number.

Filing performance as at 31 March 2013

If you haven’t met your filing guidelines your agent account manager or Large Enterprises account manager will discuss the reasons why. Outstanding returns of clients who have D status are excluded from the performance guidelines for purposes of the filing statistics and performance letters. We consider clients who have been sent an L letter (but have yet to file the return) the same as those clients with D status for filing statistics and performance letters. The “TOTAL RETURNS REQ" figure on the AMBR1002 and AMBR1003 reports and letters doesn’t include these clients.

Returns outstanding after 31 March 2013

Returns outstanding after 31 March 2013 will be subject to enforcement action. We’ll automatically withdraw your EOT for the client for the following year. Discussions and communications with you will continue to prevent any misunderstandings over actions we may take for overdue returns.

If you haven’t filed 100% of your returns by 31 March, and we haven’t heard from you, we’ll contact the client direct to discuss their outstanding return.

We can take the following actions on clients' returns that are still outstanding as at 1 April in the following year after the expiry of the EOT agreement:

• send a report (AMBR1001) listing all outstanding income tax returns for your clients
• impose a late filing penalty (under section 139A of the TAA) not less than 30 days after a warning letter is issued
• issue a Commissioner-initiated assessment (under section 106 of the TAA)
• automatically withdraw your EOT for that client for the following year
• notify you and your client that your EOT has been withdrawn in a timeframe that allows the client to provide the information you need to file the next return
• prosecute for failure to file the return (under section 143A of the TAA).

The Commissioner is entitled to consider prosecution where a person knowingly doesn't provide information (including tax returns and tax forms) to the Commissioner when required to do so by tax law. Generally, we’ll seek to prosecute where voluntary compliance goals can be promoted by taking legal action.

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Interim performance

Overall filing performance reports can be requested at any time through your E-File or TAMS package. These electronic reports can be read online and/or printed.

After each interim date we'll also send reports detailing your overall filing performance and a breakdown by return type. These reports can be used to verify that your own statistics are correct. Please refer to the "Reports" heading below.

If your EOT arrangements are being monitored by your agent account manager or Large Enterprises account manager and you fail to meet the negotiated dates and it's considered that your filing performance as at 31 March has been less than satisfactory, we will:

• hold discussions with you and explain why we're considering withdrawing your EOT
• consider and reply to any oral or written submissions from you
• formally notify you in writing of our decision.

Many outcomes are possible given the open discussions that will take place. One decision could be that we intend to withdraw EOT from all or some of your clients. If this is the case you'll be notified in writing of the names of clients who have had their EOT withdrawn.

When a tax agent’s EOT is withdrawn, we'll:

• write to each of the identified clients to tell them the EOT has been withdrawn
• commence our normal policing actions on those outstanding returns.

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Filing problems - L letter and D status

After each interim date we'll send you a report detailing your filing performance, broken down by return type. If you don't meet your filing percentages, we will supervise your EOT arrangements.

Where you have problems with individual client’s returns these can be addressed through the “D status" or “L letter" systems - not through negotiated interim dates.

Note: D status and L letter options are only available in the current year and can’t be used in back years.

Late provision of information (L letter)

If a client has an EOT and is late providing you with all the necessary information to complete their returns, you can issue a reminder L letter through our tax agents' 0800 self-service line on 0800 456 678.

The letter reminds them of their requirement to provide the information and can be done without removing the client from your agent’s client list.

Note: The L letter is issued in the name of Inland Revenue - it won’t be attributed to you or your agency and can’t be used for clients who don’t have an EOT.

See a sample of the L letter.

Late provision of information and D status

We can’t give an EOT beyond 31 March because we’re constrained by legislation. However, we may delay further action after the return due date for those clients who have been unable to comply due to exceptional circumstances, eg, pending legal proceedings. In these situations we’ll change the client’s EOT status to D (deferred) if they have:

• Y (EOT granted) or
• L EOT (L letter requesting information) for the current year.

Here are some examples of exceptional circumstances where clients may qualify for D status:

• difficult personal circumstances (eg, serious illness) involving the client
• unavoidable difficulty or delays in obtaining third-party information
• pending legal proceedings
• ongoing investigation into unresolved tax matters from a previous year or years that affect the year to be filed
• other non-personal circumstances beyond the client’s control (eg, major computer systems failure, major fire, flood) where the client’s records are damaged or destroyed.

We’ll also take the above criteria into account if they affect a related entity and you expect flow-on effects.

We’ll delay further action after the due date for the return for those clients who have D status. However, once the outstanding matters are cleared up, the 2012 return must be filed as soon as possible.

We’ll monitor the D status clients to follow the progress of these returns and will take action if there are further unexplained delays in filing the 2012 return.

If there’s a further delay in filing the return, you should advise your agent account manager or Large Enterprises account manager.

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Supervised EOT

If filing performance is less than 85% as at 31 March 2012 the agent account manager or Large Enterprises account manager will negotiate interim guidelines with the agent for next year, with a view to improving performance over time.

Guidelines won't be negotiated retrospectively; once failed a guideline remains failed, so make sure your agent account manager or Large Enterprises account manager is contacted early to discuss any difficulties in meeting the performance guidelines.

Note: The key word here is "negotiated". In such circumstances we'll expect you to have a business plan that, over the filing year, enables you to achieve at least 85% of your clients' returns filed with the ultimate requirement of 100% in mind.

Withdrawing a tax agent's EOT

If your performance is below the agreed level at the end of the tax year and doesn't improve during the following year, we may withdraw your EOT. Returns outstanding after 31 March will be subject to enforcement action. Reinstatement will be renegotiated with you directly.

Your EOT won't be withdrawn if:

• we haven't followed the procedures set out in this agreement
• you haven't had sufficient warning (proper negotiations should have taken place before we consider withdrawing your EOT)
• there are circumstances beyond your control, eg, if you've had major health problems or computer problems.

We'll inform you of our decision in writing. If you're not satisfied with this decision or you consider you haven't been treated fairly by your agent account manager or Large Enterprises account manager, you may ask for your case to be considered by the Assistance Manager, Community Relationships.

If you're making an appeal, please include:

• your agency name and IRD number
• a contact name, telephone and fax number
• your reasons for appealing against the withdrawal of EOT arrangements, or reasons why you believe you've been treated unfairly
• the reasons given by us for the withdrawal of your EOT arrangement
• copies of any letters or documentation to support your case.

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List maintenance

Adding partners and setting up separate lists

If your agency has a number of partners, those partners can be separately registered in our system as representatives of your tax agency. This enables us to issue separate reports for each partner’s list of clients, which may help administration of client lists for EOT purposes, particularly for large tax agencies. Talk with your agent account manager or Large Enterprises account manager to discuss options or fill in an Application to be a tax agent, update your details or cease as a tax agent (IR791) form under “Forms and guides".

Maintaining your client list with us

We can only discuss information about clients you hold signed approval from and are on your client list as maintained with us. You can link and delink clients from your agency list using our secure online services, tax agents' 0800 self-service line on 0800 456 678 or by completing a Client linking or delinking (IR795) form, though there are some exceptions to this. You must link new clients immediately and tell us promptly if a client changes their address.

Authority to act

As stated above you must have written authority for us to discuss information we hold about your client. Approval must be in the form of a signed and dated authority from your client worded to meet legislative needs.

Find out more by going to Correspondence guidelines for tax agents

When you file a client's income tax return by E-File and you have a current agency list with us, that client will automatically be linked to your agency number for income tax. It's recommended that the client be linked before the return is filed so you have immediate access to your client's tax information and our filing statistics are as current as possible.

Note: If your agency has more than one client list it's important to use the correct IRD number and the partner’s software when E-Filing returns. See "E-Filing" for more details on the effects of automatic linking through E-File.

You can't link clients for non-custodial parent (NCP) or custodial parent (CPR) tax types. The client must provide authorisation by writing to Inland Revenue Child Support. Written authorisation can be either a letter or a completed Elect someone to make child support enquiries on your behalf (IR146) form.

Note: You'll only have authority to enquire about your client’s account.

Clients shouldn't be delinked on the same day you file their returns if you want to get credit for those returns. This is because our system updates delinking before it updates lodgements, so you won't get credit for returns that have been delinked.

If you don't have a current address for a client and want to remove them from your client listing, unless the client has a valid address in our system, you'll have to contact us so the client can be delinked.

When delinking a client you can request a taxpack be sent to them. This removes the need to send separate advice.

If you want to cease a tax type for a client let us know prior to taking any delinking action as you won’t be able to cease the revenue once the client is delinked.

Clients can be delinked by using the Look at Account Information service, or calling the tax agents’ 0800 self-service line.

Linking and EOT

Clients with R EOT don’t have EOT automatically reinstated when the outstanding returns are filed. Please contact your agent account manager or Large Enterprises account manager if you have clients who should have EOT reinstated.

It's important the client has EOT reinstated before the current return is filed if they're to receive a 7 April due date for affected revenues for 2012 and future years. Clients who don’t have their EOT reinstated before the return is filed will retain 7 February as the terminal tax due date.

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Administration

Maintaining your clients' information

If one of your clients changes their address, we also need to be notified. Please call us on the tax agents' line with the new client details and their IRD number.

For agents who E-File, you can update address details via your E-File software.

New clients can be linked by using the Look at Account Information service, calling the tax agents' 0800 self-service line, or by completing a Client linking or delinking (IR795) form.

Don't wait until your client's return is ready to be lodged. There are several reasons for this:

• Until they’re added to the agent's list, mail from us will continue to go to the client (or to their previous tax agent).
• You won't be able to access information about your client through the Look at Account Information service or tax agents' 0800 self-service line unless they're linked for the tax types concerned.
• Your client won't get an EOT until they're properly linked. They'll be treated as a non-client without an EOT and policed accordingly.
• Any returns filed by you while your client isn't linked won't be credited to you (or they may be credited to their previous tax agent).

Maintaining your details with us

You can make changes to your agency details via the tax agents' line or by contacting you agent account manager. This includes setting up separate client lists for each partner, adding partners and changing your IRD number.

Incorrect mail

If mail for a client is going to your address when you want it to go to your client's address, please call the tax agents' line to have this changed.

If you receive mail in individual envelopes rather than in bulk, this indicates the client hasn't been set up in our system to have all their correspondence bulk-mailed to you. If you want this changed, please call us on the tax agents' line.

You can check the current bulk mailing indicator set up for your clients under "bulk mail" on the client listing report that we send you periodically. Clients coded as Y will have their income tax returns mailed to you in bulk. Clients coded N won't.

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Reports

If you’re unsure how to read a report or need guidance with the terms of reference, talk to your agent account manager. They’ll be happy to give you a full explanation of any of the reports listed here.

Note: You can request reports be sorted by client IRD numbers.

AMBR1000 - Client listing for return type report

This report is automatically issued several weeks before each return filing interim date. The report shows which clients are linked, split by EOT status (eg, with EOT, without EOT, DEOT, L EOT and R EOT because of two or more outstanding returns), and details of the tax types for which they're linked and lodgement dates for current year returns.

You can use this report to check the accuracy of our lists of your clients. If clients don’t appear on this list or appear when they're no longer your clients, you can correct your list records by using:

• Look at Account Information service
• tax agents' 0800 self-service line
• E-File
• a client linking or delinking (IR795) form.

The report can be used to confirm a:

• return is required to be filed by a client
• client's current year return has been lodged by you
• notice of assessment has been issued.

AMBR1001 - List of overdue income tax returns for previous four years

This report lists all outstanding income tax returns in the previous four years (not including the current year) for your clients.

AMBR1002 - Filing statistics by return type

This report gives various statistics relating to the interim dates to help you manage your filing programme, eg, percentages of lodged returns by balance date.

AMBR1003 - Summary of filing statistics for all income tax return types

This report provides the:

• numbers of returns required by agreed guidelines
• balance date details
• percentage of returns lodged
• types of returns filed.

AMBR1004 - Listing of unfiled current EOT year income tax returns

This report lists all active clients whose current EOT year income tax returns are:

• required, and
• still unfiled, but
• not necessarily overdue.

It’s issued in December each year but you can request one at any other time through the tax agents' line.

AMBR1005 - Provisional tax listing for return period

This report shows balance dates, provisional tax payment due, provisional tax assessed, payments received, transfers and the account balance.

AMBR1006 - Weekly activity report

This report must be requested for each individual client. It includes your client’s balance date, provisional tax, transfers and account balance.

Legislation relating to EOT.

All references are to the Tax Administration Act 1994 (TAA).

Section 3

The definition in section 3(1) sets out that a tax agent is a person who:

• (a) is eligible under section 34B(2) of the TAA to be a tax agent; and
• (b) is listed by the Commissioner as a tax agent -
  • (i) before the date on which the Taxation (Business Taxation and Remedial Matters) Act 2007 receives the Royal assent:
  • (ii) on or after the date on which that Act receives the Royal assent, after the person applies under section 34B to be listed by the Commissioner; and
• (c)  is not later removed by the Commissioner from the list of tax agents.

Section 34B

Section 34B (2) sets out who is eligible to be a tax agent. This includes:

A person who prepares returns of income required to be furnished for 10 or more taxpayers and is one of the following:

• a practitioner carrying on a professional public practice, or
• a person carrying on a business or occupation in which annual returns of income are prepared
• the Maori Trustee.

Section 34B also:

• requires the Commissioner to compile and maintain a list of tax agents
• explains how to apply to be listed as a tax agent
• allows the Commissioner to refuse to list someone as a tax agent, when listing the applicant as a tax agent would adversely affect the integrity of the tax system and/or the applicant is not entitled to make the application
• allows the Commissioner to remove someone from the list of tax agents, when continuing to list the applicant as a tax agent would adversely affect the integrity of the tax system and/or the applicant is not eligible to be a tax agent
• requires the Commissioner to collect the names of key people from tax agent organisations
• requires the Commissioner to provide certain information before it refuses to list a tax agent or removes them from the list
• requires a tax agent entity to provide certain information to the Commissioner.

Section 37

Section 37(1) states the annual returns of income required under this Act shall be furnished to the Commissioner as follows:

• (a)  [Repealed]
• (b)  in the case of any taxpayer with a late balance date, not later than the 7th of the month which is the 4th month after the end of the taxpayer's corresponding income year:
• (c)  in all other cases, not later than 7 July in each year.

Section 37(3) allows the Commissioner to give individual taxpayers an extension of time to file tax returns. This extension is decided on a case or class of cases basis to a date that the Commissioner thinks proper in the circumstances.

Section 37(4) allows the Commissioner to "extend a tax agent's time for furnishing a return of income for any taxpayer to a date that the Commissioner thinks proper in the circumstance, if the Commissioner is satisfied that -

• (a) the tax agent is unable to furnish the return of income on or before the date set by subsection (1); or
• (b) it would be unreasonable, having regard to the circumstances of the tax agent preparing the return, to require the return to be furnished on or before the date set by subsection (1)."

Sections 37(4B) and (5) provide for the Commissioner to give the clients of tax agents extensions of time in which to file income tax returns up to, but not beyond, 31 March of the following year.

 

Date published: 29 Feb 2012

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