IRD can't handle growth in debt, says Auditor-General

Tax debt is growing at a rate that is outpacing Inland Revenue's capacity to deal with it, Auditor-General Kevin Brady says in a report released yesterday.

At the end of June last year there were 202,000 cases of tax debt totalling $4 billion, the report said.

The department estimated that total tax debt could more than double within five years unless it took a different approach to managing it.

"Inland Revenue is aware of the challenges it faces, and is updating its tax debt strategy to respond to these challenges," Brady said in his report.

"It is proposing to better understand taxpayers, provide taxpayers with improved online tools, and pilot new approaches designed to enhance its processes for collecting tax debt."

Brady said his staff looked at how Inland Revenue managed tax debt collection.

"Although Inland Revenue's management of tax debt was satisfactory once debt cases were assigned to its debt officers, I agree with Inland Revenue that its overall approach to tax debt management is insufficient to control the growth in tax debt," he said.

Because the department prioritised what its debt officers worked on, some tax debt cases regarded as lower risk were unlikely to be assigned.

The report said Inland Revenue would need better information about the effectiveness and efficiency of its debt collection techniques if it was to control growth of tax debt.

- NZPA