NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

Death and taxes: Is the IRD pusing people over the edge?

Herald on Sunday
12 May, 2012 05:30 PM12 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Kent Richardson is hoping Lotto will save him from the IRD. Photo / Janna Dixon

Kent Richardson is hoping Lotto will save him from the IRD. Photo / Janna Dixon

Every Wednesday and Saturday, Kent Richardson makes a special trip to the shops for a Lotto Lucky Dip ticket. He's 51, unemployed and being pursued by the Inland Revenue Department for $97,000.

He thinks Lotto is the only chance he has to repay his debts - and he's probably right. So he buys, and checks, the tickets religiously.

He has imagined the moment many times: writing out the cheque, addressing it to the IRD, signing on the line. Then he'd buy an island, far, far away and run it off solar power to avoid so much as a utility bill turning up in the post.

"I'd never have to deal with these people again. It's my number-one wish," he says. "It sounds a bit fanciful, but I have a greater philosophy that somehow, someday, this will be sorted out."

Richardson's debt started off as around $12,000 in unpaid child support. It quickly ballooned. There was an initial 10 per cent penalty, then 2 per cent interest added each month for the past five years. That's nearly 27 per cent a year, on a par with the most unscrupulous loan sharks.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

He's at a loss to explain why he came to owe the money in the first place, as deductions were taken directly from his wages. "I've never deliberately tried to avoid my child support obligations," he says. "Whenever I saw a pay slip, the deductions were made."

Richardson still doesn't have the answer, although he now believes the anomaly may have come from the IRD overestimating his earnings each year because he was made redundant several times. Getting to the bottom of it is difficult because his current case manager has more than 400 cases. He's often left to deal with a call centre.

"Every time I speak to them, the person on the phone will contradict what the last person told me." Overwhelmed by the growing sum on the bottom of the IRD's monthly invoice, Richardson began to feel hopeless.

Advertisement
Advertise with NZME.

He thought about suicide.

"At one stage I did have thoughts of ending it. I had police knocking on my door because I had verbalised my intention on the phone to one of these people.

"It's not nice living to just survive, praying for the only solution, to win Lotto, so I could write a cheque and make it all go away."

Now, he just tries not to think about his debt-and he's not alone. Nearly 400,000 individuals and companies together owe $5.5 billion in overdue taxes. Penalties and interest fees, rather than the core debt itself, account for most of this.

Discover more

New Zealand

Kiwis living abroad cost taxpayers $10m a year

11 May 05:30 PM
Opinion

Fran O'Sullivan: Key gets serious over NZ's major issues

11 May 05:30 PM

Arrears in child support, which is not a tax but is overseen by IRD, sit at $2.3 billion. It is estimated just one third of that is the original debt - the rest is penalties and interest.

If New Zealanders paid all their $7.8 billion in overdue taxes, child support and penalties tomorrow, the money would go more than halfway to rebuilding Christchurch. Finance Minister Bill English would be able to almost clear the government deficit overnight.

These figures are staggering, but the most bizarre lies in a 2010 child support report from the Auditor-General which shows 99 per cent of the penalty debt is not considered to be collectable. Billions will have to be simply written off.

Auditor-General Lyn Provost described the penalty regime as inflexible and obstructive. "In my view, Inland Revenue's debt strategy has not adequately focused on preventing debt, nor has it addressed the adverse effect the penalty regime is having on levels of debt."

IRD case officers are there to make people pay. Constant letters and demanding phone calls are a common weapon, although the officers rarely agree to meet in person. Legal action, liquidation and bankruptcy, supposed to be the last resort, are threatened so frequently that many wonder if officers are simply trying to get files off their desks.

Everything is dehumanised. Staff will not provide their full names on the phone. They won't transfer you to the person who signed the latest letter demanding money. Case officers are frequently based in a different city from the person they are dealing with. Former university lecturer Bob Jarman says he was"hounded" during his treatment for prostate cancer, despite asking the IRD's callers to let him recover in peace.

Advertisement
Advertise with NZME.

"They have no moral fibre," he says. "I must have spoken to them about eight times. I told them to stop calling me, that I couldn't deal with it. I was out of work, I had cancer and these people wouldn't stop hassling me."

In the end, Jarman was one of the one in 100 parents who pays off the child support debt, penalties and all. Although his income has hovered around $11,000 a year since his cancer, he received a windfall from the sale of his house. The IRD took the $10,000 he owed just as quickly as the money went in.

"They just took it out. It's literally killed my life," he says. "I'm not looking forward to a happy retirement." He hasn't got his money. He hasn't got his health. But at least he's got his life. Not everyone is so lucky.

An alleged "bullying culture" within the department made the headlines last week, when the Herald on Sunday revealed recycling worker Paul Jenkins, 39, had taken his own life after the Australian Child Support Service, acting on behalf of the IRD, emptied his bank account.

Tragically, it is not the first time someone has committed suicide over tax arrears and threatening letters. Sixteen years ago, air conditioning repairman Ian Mutton was found dead next to a suicide note addressed to the Commissioner of the IRD.

Enveloped in grief, Mutton's 13-year-old son followed suit just a few months later. Records showed Mutton's $84,000 in overdue tax had ballooned out from a missed payment of $84.

Advertisement
Advertise with NZME.

There was public outcry. The department was accused of having a culture of harassment and bullying and wielding too much unchecked power.

A parliamentary inquiry was held. The powers and practices of the IRD were scrutinised. The select committee recommended changes, including the introduction of a a charter that outlined the taxpayers' rights and a complaint management process.

Those on the receiving end of the IRD debt collection machine have a feeling the department never really took any of it on board.

Alison Davidson killed herself in 2007, several years after the wide-ranging recommendations were put into effect. "She was a good person," her husband, Tom Brown, says. "She was extremely warm and intelligent. In our 20 years of marriage she certainly wasn't suicidal."

The bill that led to her downward spiral first arrived in 2002. It was for $1500 in unpaid income tax, relating to a trust account the couple had.

Brown and Davidson asked why they had been charged income tax on a transfer of money into a trust? The IRD responded by looking into the case further. Its investigators concluded the couple actually owed $564,000.

Advertisement
Advertise with NZME.

"Every time I had transferred some money from my 00 account to my 01 account, they were counting that as income," Brown says. "I said to them, 'this is craziness'. I had a book-keeper and an accountant who took care of all the business finances."

After two years of battling the IRD, Brown and Davidson separated. "She was slipping," he says. "She was convinced the IRD were going to take away the farm, convinced the IRD were stalking her."

Since her death, the debt has grown to $917,000. It's one of the many debts that IRD is unlikely ever to recover. Brown was declared bankrupt last year following an IRD petition and is still as sure as ever the department made a mistake.

"I don't know what's going on with the debt now," he says. "I certainly don't have any money to give them."

Western culture has a long and colourful history of tax enforcement. The modern attitude was captured more than 200 years ago, by a founding father of the United States, Benjamin Franklin, who famously observed that "in this world nothing can be said to be certain, except death and taxes."

But taxation specialist Terry Baucher says there has always been rebellion. "In the old days you got tax revolts; these days, people vote with their feet and move," he says."We're particularly vulnerable with people moving to Australia. Low-to-middle income earners are the ones going in huge numbers. It's not like they're making millions over there, but they've got more opportunities and a better lifestyle."

Advertisement
Advertise with NZME.

Baucher wants to know why the IRD invests so much time and resources in scaring people with huge penalties when the figures show it doesn't work. He says early payment discounts and reasonable, flat rates for late payments would be more effective.

"If you are smacking someone over the head repeatedly with a stick and they aren't moving, you have to rethink what you are doing," he says. "They're scaring people. They don't recognise that many people just clam up, they don't know how to deal with it so they just freeze and hope it goes away."

The box of tissues on Steve Dent's desk in his modest Lower Hutt office is for the strong men who end up in tears as they divulge their tax debts.

Dent is a tax-debt broker and his job is to negotiate tax repayment plans for people who are broken by years of being chased by the department. Dent started the business in the worst of the recession, taking a percentage cut of the reduction he negotiates from a person's tax debt.

"I'm not out there trying to get all this debt written off. I'm trying to work it out so people can pay," he says. "We acknowledge the need to collect the debt, but people are not being treated fairly."

His colleague Fiona Whyte adds: "You can see the fear in their eyes, they're sweating, physically breaking down and crying in front of you." Just last week, one of Whyte's clients texted in panic. She had just come out of surgery at Middlemore Hospital and the IRD had been calling - but she couldn't talk because she was hooked up to oxygen."I told her she could calm down, that it would be taken care of," Whyte said.

Advertisement
Advertise with NZME.

Other clients have admitted being suicidal before Dent and his team got involved.

"They still have to deal with it, but we get in the middle and help them get it resolved," Whyte says. Dent wants more willingness from the IRD to work with the people who are in over their heads. "The people we deal with are normal people," he says.

"I've never had anyone walk into my office who has been deliberately trying to get out of their tax obligations." And, after years of requesting a meeting, he may have finally got their foot in the door. Commissioner Bob Russell's right-hand man has agreed to sit down with them tomorrow.

Dent is keen to raise with him a recent change to the IR590 form, the form you fill out if you can't afford to pay your tax bill. It was changed last month, so the form now probes for a full account of the spouse's finances.

The law hasn't changed - the department has always been able to consider the assets and income of the de facto partner - but Dent is concerned the new tone will push people over the edge. "They're under pressure, they're stressed, they're not sleeping, the wife's having a go at them and they're filling this out ..."

Revenue Minister Peter Dunne admits the system is broken. He says changes are coming and points out his Child Support Amendment Bill passed its first reading in Parliament this week. It proposes law changes that make child support debt more affordable and collecting the money more efficient.

Advertisement
Advertise with NZME.

Tinkering in 2006 allowed IRD some flexibility - discretion previously reserved for the commissioner. But Dunne agrees that was not enough. "These are changes around the edges. The real change needs to be in the law," he says. "This has been a long process."

Dunne acknowledges he has charged IRD with making debt recovery a high priority, though it seems the department doesn't treat it as enough of a priority to meet the indebted taxpayers, nor to discuss its methods publicly.

Its spin doctors refused requests for an interview with a senior manager and dodged questions through tersely-worded emails that cited the Privacy Act or simply provided links to the department's website. Spokesman David Miller refused even to answer the question: "What is the job title of the staff who follow up with the people who owe money?"

None of the people spoken to for this story would dispute the IRD should make an effort to ensure people pay their fair share. But they share a belief that the department too often gets its sums wrong and piles penalty on penalty on people who are already in dire financial straits. They want management to be more transparent and the people working on the coal-face to display a little human decency towards their clients.

After Paul Jenkins killed himself his dad Tony called the Australian Child Support Service, which was acting on behalf of the IRD, to advise them his son had died. The taxman asked what assets had been left in the estate.

"They were determined to get the money somehow," Tony Jenkins says. "They asked, has he got a car? Has he got a house? I thought, what hounds they are, asking those sort of questions."

Advertisement
Advertise with NZME.
Save

    Share this article

Latest from New Zealand

New Zealand

Lawyer challenges 'plain wrong decision' in Jago's sexual abuse case

17 Jun 09:20 AM
New Zealand

Watch: Inside look after fire engulfs Auckland supermarket

17 Jun 08:15 AM
New Zealand|crime

Fit of rage: Man injures seven people in attack on partner, kids and neighbours

17 Jun 08:00 AM

Jono and Ben brew up a tea-fuelled adventure in Sri Lanka

sponsored
Advertisement
Advertise with NZME.

Latest from New Zealand

Lawyer challenges 'plain wrong decision' in Jago's sexual abuse case

Lawyer challenges 'plain wrong decision' in Jago's sexual abuse case

17 Jun 09:20 AM

Former Act president's lawyer claims sentence was too harsh, calls for home detention.

Watch: Inside look after fire engulfs Auckland supermarket

Watch: Inside look after fire engulfs Auckland supermarket

17 Jun 08:15 AM
Fit of rage: Man injures seven people in attack on partner, kids and neighbours

Fit of rage: Man injures seven people in attack on partner, kids and neighbours

17 Jun 08:00 AM
Inside look: Damage revealed after fire engulfs Auckland supermarket

Inside look: Damage revealed after fire engulfs Auckland supermarket

Help for those helping hardest-hit
sponsored

Help for those helping hardest-hit

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP