KEY POINTS:
Shirely McNaught is beside herself with worry.
The Auckland accounts receivable clerk gets statements each month from the Inland Revenue Department saying her husband's small decorating business owes more and more penalty tax.
Roger McNaught has just undergone six weeks of daily radiation therapy and is in no fit state to deal with the problem.
When his wife went to pay the company's second provisional tax instalment earlier this year, IRD wrote saying only $1062 was owed. "So that's all I paid."
The next month McNaught received a letter saying the company was behind in tax and owed penalties.
Since then she has called IRD numerous times. On the two occasions she has managed to get through staff have told her they can't help and she will have to write in.
She has written twice.
"It's just that no one will get back to me," she says. "I'm trying to work as well, and you can't sit on the phone for three hours a day.
"We are both in our late fifties and the stress is getting to me."
British immigrant Beverley's mother moved out from the UK last September to be with her daughter.
The family was told by New Zealand House in London that under a new rule, their retired mum would get the first four years of her residency tax-free as long as the relevant paperwork was endorsed by the IRD here and returned to Britain.
The staff they spoke to at IRD had never heard of the new regime but told them to send the documents in, which they did in December.
Despite repeated attempts in February and March to follow up by phone, they only ever got the overloaded message. And so they wrote again, requesting a face-to-face meeting.
They are still waiting. Meanwhile Beverley's mother has paid a year's worth of supposedly unnecessary tax in the UK.
"Mum's terrified that she's going to end up with a huge tax bill for not having paid tax here."
These are only two of the dozens and dozens of stories the Herald received this week, in response to a request for information about delays in dealing with the Government's revenue gatherer.
It wasn't all bad feedback. About 10 taxpayers reported positive experiences, and most said staff were polite.
But the overwhelming majority had tales of waiting over an hour on the phone, if they could get through at all; of delayed correspondence, errors, repeated incorrect computer-generated demands, ignorant staff, payments being cut off and grossly delayed rebates. It's easy to IRD-bash, and horror stories about the tax man are an old chestnut.
Even New Zealand Institute of Chartered Accountants tax director Craig Macalister admitted this week that he wasn't sure if the latest run of trouble was any worse than had been seen in the past.
However the sheer volume of emails in this newspaper's inbox would suggest Macalister is being gallant.
Other practitioners put it more bluntly.
Avondale accountant Mark Waters has been in the industry since 1974, and a tax agent since the mid-1990s. "The tax department is the worst it has ever been," he says.
"I feel sorry for the staff. There is so much stuff going in to them that they are just, I suspect, completely unable to handle the volume."
Gillian does wages and IRD compliance for a Mt Roskill manufacturing engineer, and for a local church.
"I have had many more conversations with the IRD during the last 12 months than in the rest of my 12 years put together," she says.
"Since November 2007 there have been only two months that they managed to key in correctly.
"If they've had to talk to everyone to correct the monthly mistakes for the hours and hours they've talked to me, I'm not a bit surprised they've had an overload."
The huge range of Inland Revenue's responsibilities now would seem to be the root cause of the overload.
When you think of IRD you think tax. But that's far from all the department does. It administers the outrageously popular KiwiSaver superannuation scheme, along with the Working for Families subsidy and the student loan programme. It collects child support.
On top of that it's implementing a raft of tax policy changes - the upcoming personal tax cuts, the complex foreign investment funds tax regime, a research and development tax credit for businesses, new initiatives in the charitable sector, and the merging of dates for paying GST and provisional tax, to name but a few.
IRD has got a lot on its plate, Revenue Minister Peter Dunne says.
"Because we have been making a huge number of reforms in the tax system it has generated a lot of public interest and a lot of public inquiry. We're doing what we can to meet that.
"I think it's a matter of just recognising that IRD has become probably the department that most New Zealanders will have the greatest level of interaction with."
The minister says if IRD didn't provide all these services its databases and systems would have to be duplicated elsewhere, with all the associated extra costs and security issues.
But he concedes the service hasn't been perfect of late.
"Am I satisfied? No I'm never satisfied. I always want to see us do better because I don't like people having to wait lengthy periods of time to get their calls dealt with."
He points out that over the last five years IRD has hired the equivalent of 450 more customer service people - 116 of those directly to do with KiwiSaver - and an additional $50 million has been spent on the department. Integrated voice recognition has been put in place, allowing taxpayers to do things like order forms and statements.
Plus the department has just launched a system called Virtual Hold giving the caller the option of being phoned back. But at the same time call volumes have boomed.
In June and July the department answered 88,000 - or 13 per cent more - customer calls than it did for the same period last year.
It handles up to 27,000 calls a day. Dunne says some days recently it has taken 10,000 more calls than it expected.
Almost five million calls were handled in the year to June 30.
On top of that, and perhaps more significantly, average handling times have increased by 10 per cent.
Commissioner of Inland Revenue, Robert Russell, says ironically while the internet helps - IRD is working to put more services online - it's also contributed to the problem.
"What happens is that people access the information online, they often then have more complicated questions. They're better informed, so the call handling time can actually go up," he says.
Having said that, he is encouraging New Zealand taxpayers to make more use of IRD's online facilities. "There's actually quite a lot that people can do themselves online if they go on and register, that would save them having to wait."
But trying to get through to the department on the phone is of course merely the outward sign of curlier problems.
Consider this conundrum to do with Working for Families.
Auckland mum Kathy Kell is paid fortnightly, meaning that twice a year she receives three payments in a calendar month.
The IRD's system automatically thinks her salary has increased by a huge amount, and she gets a computer-generated letter saying her Working for Families entitlement will be reduced.
This has happened at least three times. "The onus is on me to ring them, and it is extremely frustrating and stressful when you have to try again and again and finally get through and tell them the same story you told them six months ago," she says.
Russell acknowledges the issue. "We're working on it."
He explains that the IRD's computer system was designed in the 1990s to deal with tax. Since then it's had many things unrelated to taxation added on to it, such as Working for Families.
"We haven't yet been able to fix that one because of the complexity of making changes inside [the system] first, at a time when we've been trying to build the KiwiSaver project."
There are only so many experts to go round and things have to be prioritised, the head man says. "There's always a list of things you'd like to do to make the place better."
There's no easy answer to give taxpayers but as Russell says, they're working on it.
Meanwhile he'd like it remembered that New Zealand's tax administration system performs well against international benchmarks.
A Canadian, Russell observed this on a recent trip home. "They had to supplement their call centre investment very substantially over the last year to deal with increased demand."
