Inland Revenue (IR) has started calling customers with relatively small overdue GST and Employer Tax debt to help prevent debt ballooning to unmanageable levels.
Most of our customers stay on top of their tax but for those who don’t Inland Revenue wants to be clear - ignoring debt will only make things worse.
On October 9 IR began calling some customers who have debt of more than a thousand dollars which is between 6 months and 5 years old.
IR will let those customers know the amount of overdue debt they have and point out that penalties and interest on that debt are starting to mount up. We want to encourage customers to either pay their debt in full or set up an instalment arrangement.
Where GST and/or employer debt (EMP) exceeds $10,000 we will remind them of their tax obligations and the possible legal consequences of ignoring them.
Call or visit
Where we don’t get a response to our first call, we’ll leave a message asking for customers to call us. If there’s still no response, we’ll make one more attempt to contact them but won’t leave another message.
If there’s still no word from a customer, we may visit them in person.
The final two options to resolve the debt are to take money owed directly from bank accounts or start insolvency proceedings.
Since mid-June Inland Revenue has sent out 16,500 notices about planned bank deductions - 25 per cent more than for the whole of last year.
Between mid-June and September 30, 8181 deductions were completed with $17 million of debt recovered.
How to sort the debt
Customers start to sort the debt by talking with us when we call.
They can also use their myIR account to make a payment by selecting the ‘Make a payment’ link for each overdue tax type, or go to ird.govt.nz/make-a-payment.
And they can set up an instalment arrangement if they’re unable to pay the full amount: ird.govt.nz/arrangement.
Background
An entity must register for GST if:
• They carry out a taxable activity and their turnover was at least $60,000 in the last 12 months, or they expect it will be at least $60,000 in the next 12 months
• they carry out a taxable activity and add GST to the price of the goods or services they sell.