Last week - see 2011 TAXVINE No 30 (5 August 2011) - Member 135 commented on the ATO's letter advising that it intends to delay by a minimum of 12 weeks the processing of returns of taxpayers who have been identified by the ATO's "specialist technology" as having made claims for credits or refunds that merit further investigation. Member 135, you are not alone.
MEMBER 136 writes:
"I am writing to you to provide some feedback in relation to the timeframe the ATO is taking to perform pre-assessment reviews.
My greatest complaint with these issues is the inability of the ATO to provide us with guidance on why the return may be delayed. We call and hit a brick wall when it comes to explanations - I understand and support the ATO in their efforts to get things right but when our clients returns disappear into this mysterious black box called 'manual intervention' and we are unable to provide our clients with any meaningful feedback our relationship with clients is strained.
I feel that when I call to follow up for affected clients we are seen as the enemy as if it were our fault that the return did not pass through processing unhindered.The Commissioner asks us to work with the ATO every year but I feel that his team is letting their side of the bargain down by not being able to provide meaningful feedback in a timely fashion."
MEMBER 137 writes:
"I have had the same letter issued to 3 clients.
Two of these clients work in abattoirs, which means they have irregular incomes. They have no other income on their returns. Both the abattoirs involved are major employers and the information on the returns was already available on the Portal when they were prepared. One very upset victim told me she asked the pay office to take additional tax from her pay so that she could pay her council rates and other bills at a time when the abattoir is not operating and she is not receiving any wages. I do not know the circumstances of the other abattoir worker.
The other client had her refund held up for several months last year under the same program. She works as a shearing shed hand and is paid piecework rates when work is available. She has multiple payment summaries because shed hands are paid by the farmer on whose property they are working it is not unusual to have 20+ summaries. The normal practice for these workers is to nominate a percentage of earnings for PAYG deductions because although they only have one job at a time, using the PAYG tables would result in significant under deduction of PAYG (A payment summary for gross earnings of 50 to 100 dollars is also common) - in other words, the normal PAYG collection processes do not work in that industry.
Last year the letter arrived when the client was overseas attending her son's funeral. The ATO were totally uncooperative and would not budge until they had received all the original payment summaries. The officer on the case said it was because the summaries were handwritten and could be fraudulent - the computer produced summaries were ok (I thought I had heard of computers being used as a tool for fraud - but I must be mistaken!).
I later received a call about one summary that was issued by a local grazing concern that employs a significant number of people in the local area on a seasonal basis. The purpose of the call was ask about the employer (who is not my client) - asking questions about the business structure and whether they had converted to a trust from a partnership - none of which was my concern or my business - because the summary had a ABN on it that had been cancelled. I considered that call to be totally inappropriate. Why this client has been selected for a second investigation I don't know - she has the same employers as previously - her tax is deducted at the same percentage as the previous year - could it be that she has only worked for a few months and has had tax deducted at too high a rate to make sure she doesn't have to pay at year end?
It appears to me that the ATO are not good at looking at real world situations - surely they could look at occupation codes and deduce that they are dealing with seasonal workers. They say they have observed an increase in fraudulent activity - it would be interesting to know if it is an increase or they have just failed to detect instances in the past - either way it is important to deal with it the timing of 'a minimum of 12 weeks' is not reasonable timing and better processes to determine who is a perpetrator and who is a victim of their parameter setting are badly needed."
MEMBER 138 writes:
"In relation to Member 135's comments, we also have a PAYG client who has received a letter from the ATO advising his return is being reviewed and the process could take up to 12 weeks. Given his only income is a payment summary issued by a statutory authority, he has $60 of deductions and a small refund, we await the outcome of the review with interest.
On another matter, we have had a number of audits recently of business clients initiated by the 'benchmark program'. In all cases the ATO officers acted courteously and reasonably, and there have been no adverse outcomes for our clients, but I am concerned that the process seems to shift the onus of producing any kind of evidence from the ATO to the client. It does not appear to me to be consistent with the taxpayer charter or the basic principles of our legal system. I would think a figure outside of a benchmark may be an indicator of who to audit, but it is unreasonable to use this to say 'we are going to say this is your income - prove us wrong'."
MEMBER 139 writes:
"I also have a client with one Payment Summary and deductions under $300.00. Each and every year this client has extra tax taken out of her refund so that she then has money to pay her council and water rates. Lo and behold this client now has to wait a minimum of 12 weeks for her refund and consequently cannot pay her rates.
Is the ATO going to reimburse her for the penalties that will be assessed to her for late payment of these rates? Or is the ATO going to reimburse her the amount she would have had received as a discount for early payment of her rates? Why does it take a minimum of 12 weeks to contact her employer to verify that her one Payment Summary is genuine? They have no trouble in telephoning my clients when they want information from them and this brings me to another matter.
The ATO contacted my client by telephone to do a telephone review of his superannuation obligations. I knew nothing about this until I received a letter from the ATO to my client thanking them for doing this interview and reminding them to keep their superannuation obligations up to date. How dare they contact my client by telephone without informing me? As I told my client that they should never ever respond to any questions by phone from the ATO as this could be anyone representing themselves as ATO staff. My client felt that because they stated that they were from the ATO that he had to answer their questions.
Where has the mutual respect gone whereby the ATO used to correspond with the Tax Agent directly as first port of call? It appears that they are doing everything in their power to undermine us! Especially as I have noted in this year's Tax Pack, in relation to 'who can complete your tax returns', it lists friends, relatives, community volunteers and of course E-Tax but no mention of registered Tax Agents. Please note that over all the 20+ years I have been a registered Tax Agent this is the first year that the ATO has failed to mention in their Tax Return Instructions and Tax Packs that Registered Tax Agents can prepare people’s Tax Returns - Says something for the serious break-down in the relationship between the ATO and Registered Tax Agents!"
MEMBER 140 writes:
"We are a small accounting firm and we now have three clients whose refunds are being held up by the ATO for a minimum of 12 weeks (All three returns are salary and wage with nothing out of the ordinary). This is undermining the confidence our clients have in our preparing their tax returns and I wonder if they are now thinking we don't know what we're doing? Especially as the letter they are receiving from the ATO states 'we are using specialist technology to help us identify and review returns that may contain missing and/or incorrect information'. We are now just over 6 weeks into the tax season. I cringe every time I tell a client they are receiving a large refund. What do I tell clients now - the ATO processing time is anywhere between 14 and 90 days?"
MEMBER 141 writes:
"I have had the same experience as Member 135 re the ATO holding up a client's 2011 income tax assessment with the same letter alleging serious breaches of taxation law requiring a minimum of 12 weeks to review. The tone of the letter is tantamount to an accusation or allegation of serious breaches of taxation law. Upon calling the ATO and taking up the ATO on what is the serious breach - I'm told that no information can be offered until the investigation is completed. A complaint to the Tax Agent Complaints Area results in the same deafening silence.
Where does the ATO get off making serious allegations on their letterhead and then lack the intestinal fortitude to back it up with any evidence or explanation of their charge? We, as tax agents, need to take a very firm stand on this new round of antagonism from the ATO and our professional bodies need to lead the charge.
The 60-ish taxpayer in this case has one PAYG Payment Summary from a large semi-Government employer who he has worked for since his teens, some interest received, union fees, laundry of a uniform and our fees. He is no master criminal or identity thief and simply does not deserve this 'Big Brother Is Watching You' treatment from the ATO.