Accountants are taking aim at the heavy-handed tactics the ATO employs when collecting tax debt, claiming that outsourced small business debt collectors are regularly nasty and aggressive.
Speaking to a room of accountants and tax agents at the Institute of Public Accountants’ Women in Practice series on Monday, the Inspector-General of Taxation and Taxation Ombudsman Karen Payne (pictured) announced that debt collection will be the focus of one of her first reviews on the job.
“Without giving anything away, the area of debt collection is one area that I am very interested to go back and revisit as one of my first reviews,” Ms Payne said.
According to the ATO, external debt collection agencies focus on collecting routine income tax, activity statement and super debts.
“Our research suggests that your experience with an external debt collection agency will be similar to dealing directly with us. External debt collection agencies must meet our service benchmarks,” the ATO’s website reads.
However, firsthand experience tells a different story.
A number of accountants present at the IPA’s event told Ms Payne that they have received a number of phone calls from alleged debt collectors who have employed very heavy-handed tactics, demanding personal information in an overly hostile manner.
According to one IPA member, outsources are frequently ringing up accountants, demanding personal data without providing any background information. Often, the debt claim is not corroborated by the tax agent portal.
“Why should you ring me and want me to give personal information about my client? If you are who you say you are, you’ve got that information at your fingertips and you’ve also got my telephone number, knowing I’m the tax agent. And then they get nasty,” said one member of the audience.
Public investigation warranted
Ms Payne encouraged accountants and tax agents going through similar situations to lodge formal complains with her office.
“I would encourage you, if you’re getting that kind of scenario, that is exactly the kind of complaint you can raise with us. And we can then go in on behalf of your taxpayer client or yourself, we can look at the file, look at the records and verify whether or not this is appropriate.
“If we get a series of these kinds of complains coming to us, that would then be cause for us to say, right, what is going on here, I’m going to go do a public investigation of the debt collection practice of the Tax Office, or I’m going to go now and raise it with the head of debt collection in the Tax Office,” Ms Payne said.
She noted that while the role of her office is to improve the system for the benefit of all taxpayers and practitioners, it needs to know what those burning issues are.
“Coming to conferences and discussions like this, we get to hear real feedback. But also through our complaints line, if people ring up and say I’ve got this complaint, we get to build a picture of these complaints and use that to try and get change.”
The last review of the ATO’s debt collection system took place in 2015 following a number of concerns raised by individuals, small businesses, tax and insolvency practitioners as well as their representative bodies.
At the time, the Tax Office acknowledged that its previous approach to debt collection was “random and ad hoc” and had not reduced its overall growth.
In relation to its engagement of external debt collection agencies, the IGT recommended that the ATO better inform and educate the public by providing information on its use of external debt collection agencies, both to assuage concerns and to make transparent the intended benefits and outcomes.
Maja is a content producer for Public Accountant magazine.