Tax Administration Intensifies Enforcement Actions

As the Tax Administration steps up its compliance activities against delinquent taxpayers to collect outstanding taxes, several strategies have been employed. The compliance programme will be further intensified in the new fiscal year, which begins April 1, 2010.
To date, for the 2009-2010 fiscal year, the increased enforcement actions have seen 3,184 taxpayers being brought before the court for various tax matters valued at $8.9B. Additionally, 818 summonses have been served on self-employed individuals and organisations across the island, for failing to pay or make suitable arrangements to settle their outstanding taxes.
To deal with the most difficult cases, a Special Enforcement Team (SET), which is attached to the Inland Revenue Department (IRD), has been using the option to issue Levy Warrants. This allows the Officers to seize assets and, if necessary, auction them to recover taxes owed. Since June 2009, when the SET was established, 136 Levy Warrants have been issued. It should be noted that once an account has been turned over to the Special Enforcement Team or legal action has been initiated, persons will lose the option to negotiate a settlement with the Commissioner, Inland Revenue.
Additionally, the IRD and the Taxpayer Audit and Assessment Department (TAAD) have been working in partnership to investigate and examine payroll records, to determine if new revenue measures applicable to allowances and high income earners are being correctly applied. So far, examination of 746 payrolls has revealed that taxes were under reported by $221M. To date $119M of the unreported amounts have been collected with arrangements made for the liquidation of the balance.
As the tax authorities continue its drive to ensure that persons pay what is due – no more, no less – they have signaled that they will also be using “Stop Orders” to prevent delinquent taxpayers from traveling outside of the country. This option will be utilised where outstanding amounts have not been paid nor suitable arrangements made for settlements, or in the event that a taxpayer disobeys a Court Order. 50 cases relating to high profiled persons, including entertainers, have already been identified and “Stop Orders” are being served. Other enforcement actions, including committing delinquent taxpayers to jail, will be utilised during the upcoming fiscal year.
Despite the heightened compliance activities, the Tax Administration is still open to discussions with taxpayers who are having a difficulty to meet their tax obligations. Taxpayers with outstanding amounts are encouraged to visit their local Collectorate to speak with the Collector of Compliance or an Assistant Commissioner to negotiate a reasonable payment schedule. It should be noted that any payment schedule set out in the written agreement shall be strictly enforced.