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In his report released on 21 September 2010, the Commonwealth Ombudsman has expressed concerns about how the ATO has handled complaints about compromised Tax File Numbers (TFNs).

The report examines 8 case studies where taxpayer’s TFN had been compromised or incorrectly linked by the ATO to another person’s TFN.

"The action taken by the ATO to deal with these complaints was unreasonable. Our investigations have shown a systemic failure by the ATO to properly recognise and respond to the issues faced by taxpayers," said the Ombudsman, Allan Asher. "When this unique identifying number is compromised the impacts on a taxpayer can be significant. It can cause delayed refunds and payments, debts being incorrectly attributed to the taxpayer or problems with other agencies like Centrelink, where information is exchanged."

In the case of Mrs D, her difficulties began when the ATO wrongly determined that she had two TFNs. In fact, Mrs D only had one TFN and the other number belonged to another taxpayer. The error meant that Mrs D had income incorrectly attributed to her.

This was upsetting and difficult to resolve, not least because English is not her first language. Mrs D complained in writing but nothing happened. Finally, after two years and an Ombudsman investigation, the TFN confusion was sorted out.

In Ms G’s case, an unknown person used her TFN. Ms G was receiving a Centrelink benefit and the illegal use of her TFN led to a $7,000 Centrelink debt and an ATO penalty of $2,250. It took two years and an Ombudsman investigation for this to be resolved.

The ATO agreed with all 5 recommendations in the Ombudsman’s report and said that it is already taking action to improve its response to TFN compromises.

"However, further complaints we have received show that the problems are far from solved and the actions taken by the ATO to date, while a start, do not fully address our concerns," the Ombudsman said.

For a copy of the Ombudsman's report, "Australian Taxation Office, Resolving Tax File Number Compromise", Report No 12 of 2010, go here


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