Examples of recent tax negotiations
We specialise in working with people who have tax debts and other difficulties with the IRD, or who need to file tax returns. Some recent examples of cases we have handled are:
- A former New Zealand resident moved overseas and rented out her property. She was badly advised and told that because she had become a non New Zealand tax resident, she didn’t need to file a tax return in New Zealand for the rental. Not declaring income can amount to tax evasion and lead to large penalty costs and criminal prosecution. We prepared and filed several years’ tax returns. There was a small bill to pay. The client had paid tax in another country and she will be able to get that back under the double tax treaty. The net result was that the IRD was happy and there was no further risk to our client.
- A retired couple had lived in New Zealand for several years. They had investments in the UK and did not realise that the investment income needed to be declared in New Zealand with tax to be paid here. They approached us as they had recently become aware of the issues and were worried that they would be in trouble with the IRD. We made a voluntary disclosure on behalf of the clients. The IRD substantially reduced the penalties to be paid and everything was brought up to date.
- A client owed a substantial amount to the IRD. They had made no payment at all, partly because of tragic personal circumstances and partly because they felt they got nowhere when they tried to talk to the IRD directly. We explained the circumstances to the IRD and they immediately offered to wipe 100% of the penalties. The client was able to arrange a payment for the remaining debt.
- The taxpayer’s company had failed but drawings meant that the taxpayer had a personal liability to pay the IRD $120,000. They owned a home and selling this would have yielded funds to pay the IRD, however, the taxpayer was desperate to keep the home and find another solution. We were able to negotiate a write off of around $70,000 which meant that the home was saved.
- The taxpayer had moved to New Zealand. They thought that their overseas income was covered by the temporary tax exemption available for many migrants from overseas, but in their case it was not as they had been a tax resident for a short time, 9 years ago. A voluntary disclosure was needed to put things right with the IRD. The taxpayer had a large tax debt in respect of the income they had not declared. We were able to negotiate a write off and a time payment arrangement for the balance.
- A taxpayer had bought and sold several properties in the last 5 years. In each case they renovated to make the properties more attractive to live in. Because of the pattern of dealing, the IRD assumed that tax was payable and our clients received a catastrophic tax bill. In fact, there were genuine reasons for the house sales. We presented the case in a way that was accepted by the IRD and the result was that there was no tax to pay.
- The taxpayer owed a debt to the IRD. They ignored it until the day that their pay was docked with an extra 20% to pay the IRD. There was no warning. The taxpayer now did not have enough to pay their rent and other bills. We entered into urgent negotiations, and once a deal was agreed, the IRD removed the pay deduction notice. We have had similar cases where the taxpayer’s bank account was cleaned out by the IRD.