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Accountants say the Inland Revenue Department is so overloaded with new initiatives such as KiwiSaver that other taxation work is getting put on the back burner.
The New Zealand Institute of Chartered Accountants says getting anything else done is becoming an uphill battle. Members are waiting between 15 minutes and half an hour on the phone, correspondence is slow, and queries go unanswered.
But IRD says while mid-year is its peak time, it is coping with the additional workload.
Institute director of tax Craig Macalister said KiwiSaver had "sucked up quite a large amount of resources", but it wasn't just the superannuation scheme that was creating extra work for IRD.
The Working for Families programme had put increased stress on the department's phone system. There were also a number of tax changes to implement, such as the new combined payment dates for gst and provisional tax, the foreign investment tax rules, and the upcoming personal tax cuts.
The institute's senior tax manager for Auckland, Steve Rutherford, said IRD appeared to be struggling.
He said there had been promises of enhancements to IRD's online systems to relieve the pressure, such as enabling tax agents to make transfers and update client details online.
However, he understood that had been held back because of KiwiSaver.
"They keep saying they're getting new staff and they're endeavouring to do the best they can. I don't think it's from a lack of trying, I just think they've got limited resources."
The institute acknowledged problems with IRD were perennial and the latest may not be out of the ordinary.
For example, it was common knowledge not to try ringing Inland Revenue on a Monday, Rutherford said. "All their mail goes out over the weekend, so Monday is their big day for telephone calls."
Cameron Brewer, general manager of the Newmarket Business Association, said the area's 30 accountancy firms all seemed to be "pulling their hair out at the moment".
"The IRD's got its work cut out largely because of recently introduced Government policy. It's proving one headache businesses don't need at this time in the economic cycle."
Employers and Manufacturers Association (Northern) executive officer Garth Wyllie said its members had faced difficulties in getting information about what qualified for the new research and development tax credit, which takes effect this financial year.
"That doesn't help when you're trying to plan - do you invest in new capital developments or new R&D-type work, when you can't actually get the right information to start with.
"I don't know if they just don't know the answers or they don't want to answer them."
But Carolyn Tremain, the IRD's deputy commissioner of service delivery, denied resources had been diverted into KiwiSaver.
"In actual fact KiwiSaver is operating as a separate line of work, it's not fully integrated yet, and so it's resourced to manage its own workload."
With the July 7 filing date for individual taxpayers, this time of year was always busiest for the department and 2008 was no different.
She said call centre volumes had gone up - IRD received 4.2 million calls this year, compared with 3.8 million in the corresponding period last year.
To help deal with that IRD had just launched a system called Virtual Hold, which gave the caller the option of being called back if they had been holding more than five minutes.
It was gradually moving more services online.
Tremain added that 90 per cent of written correspondence to IRD was handled within 15 working days.
She also said the department had done a lot of work running seminars and meeting businesses to advise them over the new R&D tax credit.
