115,000 pensioners face huge tax bills due to blunder

UP to 115,000 old-age pensioners face paying thousands of euro in unpaid taxes as a result of a blunder by the Revenue Commissioners.

Revenue has discovered its records on pension payments were not kept up to date and did not tally with those of the Department of Social Protection.

Yesterday, 115,000 pensioners received letters from Revenue outlining their possible under-payment of tax.

It has also emerged that at least 2,500 people with private annual incomes of over €50,000 who receive the state pension of over €11,000 per annum were not declaring their pension payments from the state to Revenue.

Individual pensioners will have tax liabilities of several thousand euro as a result of the blunder, which resulted in Revenue being unaware and having “no record” of tens of thousands of people receiving the state, transition, widow’s/widower’s/surviving civil partner’s and invalidity pensions.

In the letters, Revenue told pensioners of changes to their tax credits for this year and last year which will result in an increase in tax to be paid and tax owed by many pensioners.

However, pension providers and employers were made aware of changes to pensioners’ tax credits in early December.

Those who will have to pay back tax include pensioners who never previously reported their state pensions to Revenue; those who under-reported; and those whose circumstances had changed.

Revenue said in cases where the pension is not on record and their other income already brings them into the 41% tax bracket, the annual additional liability could reach €4,400 for a single person and €8,800 for a couple.

“These cases will already have reasonably significant non-DSP (Department of Social Protection) income and at least 2,500 cases have non-DSP income in excess of €50,000,” Revenue said.

In many of the other cases Revenue said “the additional liability will be modest”.

About 20,000 taxpayers will pay less tax as Revenue records overstated their department pension.

Under the Social Welfare Consolidation Act 2005, Revenue has the right to access pension data but only appears to have done so in recent months.

Only pensioners receiving a pension or salary on top of their state pensions are impacted by the error.

Revenue said a person who is 65 years of age or over may have a state pension and other income sources but may still not pay any tax if their total annual income is likely to be less than €18,000 if single, or €36,000 if married.

* http://exa.mn/revenue