How Compassionate are Revenue in Cases of a Genuine Mistake

Infoseeker1975

A friend's mother used to live in the US up to the time that his father died, she returned to Ireland, this was 13 years ago.

She was in her sixties and returned to work part time as an admin in the public sector.

Her husband had a pension in the US and she currently gets 300 euros a week since his death, her other income is the state pension and about 30 euros a week as a pension from her admin job.

She is now in a nursing home and my friend has discovered that she never declared the 300 euros per week from the pension from the US.

Obviously she should have declared this; my question is that if my friend contacts Revenue about this then is there any compromise, her only means is her house and the pension, the house is worth about 350k.

Should my friend contact a tax accountant in relation to this, I assume he should given the liability could be very high.

letsbefair

my guess is that the figures are pretty black and white and revenue will apply the tax law. Best to get a tax advisor to do the figures and approach the revenue sooner the better to reduce interest and penalties. It maybe possible to pay any arrears over time. It may not be as bad as you think but definitely get professional help.

blackbox

They may be able to be compassionate about the penalties they apply, but the tax owed is not negotiable.

capefear

https://www.boards.ie/discussion/2058423925/how-compassionate-are-revenue-in-cases-of-a-genuine-mistake

Go to an Accountant or a Tax consultant and get them to work out what the figures are, so your friend knows what figures they are dealing with. Make sure the accountant takes everything into account, including things like who is paying the nursing home fees, etc, as there are refunds on the nursing home fees which can be offset against the tax bill, etc. Once the advisor has the figures due to the revenue by year, plus interest and penalties, they can then make a voluntary disclosure where they won't be published, and the interest and penalties aren't as high. The accountant can agree on a phased payment plan on behalf of the client, where they pay 10% or 15% as a down payment and clear the rest with a monthly direct debit.

If you are afraid that the revenue will ask questions sooner rather than later (if they ask questions first, you can't make a voluntary disclosure), go to an accountant tomorrow and tell them the situation and get them to email the revenue about a notice of intention to file a voluntary disclosure and they will get 60 days to get the figures in order and arrangement a payment plan etc.

the_amazing_raisin

So a few years ago I made a balls of my Form 12 and ended up getting around €3k of a tax refund that I shouldn't have

Due to how Revenue's online portal worked at the time, I couldn't go back and change it

I ended up calling them and the folks in Revenue sorted it out manually after a couple of weeks. I did of course have to pay back the tax but there were no penalties

So I think they're pretty okay with not applying penalties in the case of a voluntary disclosure

I think the best approach would be to get an accountant to sort out how much tax is owed and then declare it to Revenue

She'll obviously have to pay the tax bill somehow and this can be worked out with Revenue. They could for example lower her tax credits over the course of several years or apply an additional deduction

However, given the tax bill is probably several thousand as you this point, it might be easier to just pay it out as a lump sum if possible. While it is painful to see a lump of savings get incinerated, it won't deduct from her income in retirement at least

gipi

Was the additional income declared for the Fair Deal scheme (if the lady availed of it)? If it wasn't, family will need to talk to the HSE asap.

jackboy

Also is the state pension contributory or non contributory?

Jim_Hodge

https://www.boards.ie/discussion/comment/123797147#Comment_123797147

That doesn't impact tax obligations

jackboy

https://www.boards.ie/discussion/comment/123797155#Comment_123797155

It applies to social welfare if the other income was not declared to them either then she may not have been entitled to all of a non contributory pension.

Buffman

OP, does the friend have power of attorney for his mother?

munchkin_utd

Maybe its not an issue in the first place

Ireland has insanely generous tax credits, and for pensioners (unlike working people) they share them, so maybe with the combined tax credit there'd be no tax liable anyhow

Definitely get an accountant/ tax consultant on the job. They deal with this the whole time and can clean up the matter.

Lenar3556

Is it the role of the son to intervene in his mother’s historic tax affairs?
Is a revenue compliance intervention likely?

€330 a week wouldn’t generate much of a tax liability.

MakersMark

Does Revenue even know?

If not, why inform on a woman with dementia in her mid 70s?

Especially on a 15k a year US pension?

Kalimah

Revenue will find out. I can guarantee you that. €300 a week for 13 years is quite a bit. If a voluntary declaration is made it’ll go easier on the mother.

Lenar3556

https://www.boards.ie/discussion/comment/123825909#Comment_123825909

You guarantee revenue will find out about what? Are you suggesting the lady is guilty of some kind of fraud and that her son should turn her in?

There is no income tax liability on a weekly income €330.

Charles Babbage

https://www.boards.ie/discussion/comment/123826482#Comment_123826482

Yes, but that is in addition to two pensions!

Kalimah

€300 a week over 13 years is a tidy sum. If she’s getting a state pension from here along with the American one she will be liable for tax.
If she hasn’t declared it she’ll be in trouble. Best to talk to a tax professional asap before Revenue come looking for her.

Jim_Hodge

https://www.boards.ie/discussion/comment/123826482#Comment_123826482

There is liability, as state pension and 2 small pensions would total over 32000. Read the OP again. Her income is not just €330 per week.

MrMusician18

https://www.boards.ie/discussion/comment/123825851#Comment_123825851

If a pensioner had a €30k approx income per year would his not generate a roughly €3k PA tax burden?

Buffman

Without power of attorney, other than 'reporting' his mother for potential 'issues' like any other member of the public could do, what legal right does the son have to discuss anything with Revenue or anyone else (Accountant or tax advisor)?

In these days of GDPR even giving her PPSN to a third party without consent would be an issue.

Charles Babbage

The other question is what arrangement exist for the US pension? Is any US tax deducted and if not what information was provided to the IRS to ensure that? Without any particular knowledge of this I would expect that if you secure exemption from US tax deduction on the basis that you are in Ireland then they might share this with the Irish Revenue. If US tax is deducted, then there might not be large bill in Ireland. Lastly, if the lady is a US citizen she is obliged to file a US tax return also, although many do not bother.

ebbsy

https://www.boards.ie/discussion/comment/123826703#Comment_123826703

Good point on the US tax deducted.

Although I have seen a lot of UK pensions where no tax was deducted, so the amount on the bank statement was the amount taxable.

Charles Babbage

https://www.boards.ie/discussion/comment/123902398#Comment_123902398

In the UK case, nothing is deducted, but the information is shared with the Irish authorities, so there no point in pretending that not reporting it to the Revenue is an option.