With the new rollout of the IRD computerised system fully in place, it is important that when making your tax payments that the details are correct.
- IRD Number
- Tax Type
- Tax Year
As your payments are processed by computers without humans reviewing it, if an incorrect IRD number, tax type or tax period has been entered there is no ability to fix these anomalies. This especially applies to making provisional/income tax payments
You may not be aware that you have made an error, and we are not aware of this, as generally no correspondence I sent to you from IRD.
Some scenarios we have dealt with recently are:
Incorrect Tax Year
A payment was made by a client to the incorrect year. IRD were not expecting any tax payment for that particular year so the system automatically refunded it back to the nominated bank account they had on file. When the client’s returns were processed for 2019 there was no provisional tax showing as paid. The client recalled paying this, but it had been refunded in error by IRD and the client didn’t realise.
Now the client is up for penalties and interest on their short-paid provisional tax.
As above a similar scenario but the client contacted us excited about the windfall from IRD, by the time we had worked out what had happened and the client repaid the tax, there were penalties and interest incurred.
Incorrect Tax Type
A payment was made to Income Tax instead of GST. A letter was sent to the client after the due GST date requesting payment to be made. Late payment fees had been applied.
A payment was made for an invalid tax type that the client was not registered for. The money sat in a “holding” account and they were not contacted or made aware of it. It only came to our attention after completing the tax return, the client mentioned they had made a tax payment which was not visible on their tax file or online with IRD. After a long call to IRD and supplying a bank verification statement we were able to locate it and apply correctly.
**Unfortunately, IRD are under no obligation to remit any charges or penalties due to “human error” on your part so please ensure that all details are correct before making a payment.
We could give you numerous other examples but please realise it has become extremely important with the new tax system. The removal of any human intervention means that the rules are set and they rely on you getting the information to them correctly.
This also results in us spending a lot of time fixing these errors on the phone and through email correspondence, which means even more cost to you. If you are unsure at any point when making payments to the IRD please do not hesitate to contact us and we will gladly assist. 09 273 3682