09 Mar 12 On ATO (mal)administration
MEMBER 41 writes:
"I have written in a few times about the gripes I have with the tax system. I consider that I have actually been pretty good about all of the absolute inconsistencies, untrained ATO personnel giving tax advice or ATO staff members that aren't aware of their own in house systems, but the attempt at finalization today of a case has me at the end of my absolute rope. Despite the small amount involved, this is a principle thing that I am going to keep going. The problem is I have wasted so many numerous hours (including the 58 minutes on the phone yesterday trying to find a reason behind this decision) that as a small business owner I cannot afford to keep going. This level of maladministration is absolutely ridiculous.
I have a small tax return client who lodged their income tax return on 29 July 2011. On 27 September 2011 we received a letter from the ATO advising that they have held the refund pending further review. (I have read the comments in TAX VINE to know that all practitioners are pretty much familiar with these letters). One of the kicks in the face that I had with this letter was that the reply was due in 14 days or they would cancel all tax deductions.
First, are you kidding me, I wait two months for a letter to have 14 days to reply?
Fine, get the requisite documents in to the ATO, we supplied photocopies of EVERY receipt used as the basis for the calculation supplied in a nice easy to read spreadsheet that even a monkey could understand. Do we hear anything? - no. We have the client ringing up weekly for progress, a progress report that we can't get. We keep getting the matter escalated, escalated, the client starts calling the ATO directly.
Finally, in December 2011 the taxpayer receives a phone direct from an ATO officer advising that she has now been appointed to the case and that she would personally ensure it was resolved in 7 days. Does that happen? - no, of course not. Here we are at the end of January 2012 and I got in the mail this letter entitled 'Notification of income tax adjustments to your 2011 income tax return'. Three pages of nothing...the first page is the only page that actually has any real information because the other two were simply just information about penalties, blah blah blah. So I get one page to explain the adjustments that this ATO officer has made to the return and there is no text, no explanation - just a table. Label, Original Claim, Amended Claim. That is the three headings on this oh so informative table.
Now, the ATO officer who made the decision is refusing to take my calls because, wait for it...she is too busy. What??? She is too busy to take a phone call to provide an explanation about the decision that she has made. What about me and my time? There is no information contained on the letter that has been forwarded. Every other department is required to give a reason for the basis of their decision, but apparently this ATO officer in this section of the ATO is absolutely unaccountable. As an absolute kicker she has applied a 25% base penalty for failure to take reasonable care. Are you kidding me? We supplied 44 pages (yes 44) of evidence and clearly had a reasonable basis for everything included in the return.
Furthermore, the ATO's very own Practice Statement PS LA 2006/8 states VERY CLEARLY at paragraphs 57-59 that where there has been no progress on an audit for more than 30 days that the penalty should be remitted - why was this not applied? There is no reasonable way that the ATO can claim that there has been activity on this file for the duration of this review.
The ATO response after my marathon call today is that I should raise an objection. Great, but objection to what? That is the whole point, there is no information to advise HOW this ATO officer has calculated the amendments that she has made to the return. On what basis do I object because I don’t know her decision and she is refusing to explain it and hiding behind other areas. Where is the accountability?
This system is broken and I didn't realize just how badly until yesterday. This is absolutely unacceptable and a pathetic way to treat agents who are here to help implement this system. I will lodge my objection and very clearly state that I don't know what I am objecting to because no one gave me any information. Maybe in house the ATO may be able to obtain the information that should have been given to me in the first place!
Absolutely appalled. Can you please let me know what section of the ATO that I can send a bill to under their maladministration clause because I am absolutely fed up?
Thanks for listening to me whinge."
MEMBER 42 writes:
"An ex-client (who doesn't speak fluent English) contacted us about entering into a payment arrangement for her 2011 tax debt. She prepared her own 2011 return and not through us. The ATO decided to investigate her return and issued a letter requesting further information.
The taxpayer is a simple salary and wage earner (gross wages $42,000, PAYGW $6,400 Medicare exempt) and should receive a refund of about $350.00 based on her 2011 pre-fill information.
We added her to our tax agent list to prepare the 2005 nil return and noticed she had a $7,000 tax debt for 2011. We then contacted the ATO who advised they had requested a copy of her payment summary for 2011 in addition to support for some work deductions. As the client did not respond to the request, the ATO disallowed the deductions (no issue there) but also disallowed the PAYGW credits while at the same time including the full gross wages.
They then proceeded to issue her with a shortfall penalty for not exercising reasonable care of more the $2,000. She lodged her return based on the payment summary from her employer so in fact did exercise reasonable care.
In summary, the ATO receives the wages and PAYGW info (it's on the prefill) directly from the employer. The ATO then writes to employee and asks for the same information the ATO already has. Employee doesn't respond. ATO accepts the gross income but reduces the PAYGW to nil and charges employee excessive penalty.
I have several concerns here and believe the ATO is just out of control. They already have the payment summary direct from the employer and have accepted the income. Why did they decide to deny the PAYGW when they already have proof of the amount and then administer such an excessive penalty? This is a $350 refund taxpayer, not a tax cheat. Maybe the ATO officer had his coffee mug covering the PAYGW (yes I am angry about this).
Come on ATO, this is beyond a joke. You had the information from the beginning. Stop bullying for the sake of increasing your revenue.
To fix this an objection against the assessment needs to be lodged as the case is closed. We are not going to do it as we don't get paid for any of this (it was a $70 tax return). The client won't know how to do it and already thinks the assessment is correct. Outcome, ATO picks up double tax on the same income (once through employer and again through the employee) plus a nice little $2,000 penalty all from issuing a standard letter.
I have really had enough of all this."