A game of ping pong with the IRD and the Bank

It’s Income Tax filing time, and many are now completing their returns for the year. As a client, you will see the finished product: a return, filed on time, numbers reconciled, nothing left out that shouldn’t be.

What happens behind the scenes, however, is never really witnessed: the checking, the chasing, and the refusal to let an obvious error slide just because two institutions would rather blame each other than fix it…

Over the weekend, I began preparing the income tax return for the company that owns my orchard. Naturally, I encountered a case in point from this filing season.

An essential part of the Income Tax filing process is the Inland Revenue Department’s report which is available on the MyIR portal. In essence, it collects all the interest, Resident Withholding Tax (RWT) and Portfolio Investment Entity (PIE) income and links it to the client via their IR numbers. The MyIR report will show the gross interest income and the name of the bank which paid the interest income. Similarly, for PIE providers, the IRD will name the PIE provider and the PIE income.

PIE providers and banks file the return electronically with the IRD, normally before the end of May each year. The IRD does not have access to the name of the client – only their IRD number, along with the income and withholding tax attributed to them which are automatically uploaded into MyIR.

To my surprise, MyIR showed interest income and RWT credits from a Bank (which I will not name) with which I had never banked. I also knew for certain that the orchard company had never banked with this bank either. I knew immediately what this meant: someone is missing income and RWT credits from their return, and it seems likely that the bank had either keyed in the wrong IRD number or their customer provided the bank with an incorrect one. Not a mystery. A data error, and normally a quick one to fix by either the IRD or the bank in question.

It wasn’t.

I rang the IRD to explain my situation. I also received the reply I expected.

“Sorry, the IRD cannot fix this issue . We only get the IRD number and income reports from the Bank, and not the customer’s name . You need to get Bank Bank to fix it.”

Following the IRD’s response, I gave the bank a call. After navigating their automated phone system – which repeatedly asked for the bank account number I was calling about (a little difficult when you’ve never banked with them) – I finally got through to a real person named Ryan.

Ryan politely informed me that the bank could not help me and suggested I contact the IRD. When I replied that I had already done that and was told that only the bank could resolve this issue. It quickly became apparent this could potentially turn into a game of ping pong between the IRD and the  bank, as both insisted that only the other could address this issue.

I called the IRD back and told them what the bank told me. Of course, I got the same reply.

“No, the IRD has no knowledge of which Bank customer has used the wrong IRD number. Only Bank can fix this.”

Hmm. Okay. One last go. Back to Bank.

It got laughably ridiculous after this moment.

Ryan said the the bank could not help me unless I was able to identify which of their customers – who they had onboarded and verified – had incorrectly used the IRD number of my orchard company.

Yes, you read that correctly.

To make matters worse, Ryan was unable to advise me on identifying this customer. And even if I had managed to do this, the responsibility for reaching out to that customer would fall on me — the bank would not contact their own customer directly — and then I’d have to convince a stranger to walk into a branch and fix their account. In other words, until I had accomplished the near impossible, the bank was unable to help.

That’s not a process. That’s a dead end dressed up as a process. And I said so to both organisations.

I was met with what anybody in my situation would’ve loved to hear: it’s policy.

This is just one of the many roadblocks we run into when filing returns. It’s more than just entering numbers. It’s noticing what’s wrong before it becomes a problem. Knowing the client well enough to say, with certainty, ’We’ve never banked with this bank before.’
 
Now, I cannot file the income tax return for the orchard company. The bank has made an error, by either not correctly verifying the IRD number of their customers or keying it incorrectly into their system.

This perfectly demonstrates my flaw with MyIR. My orchard is not the only one with incorrect MyIR details. It’s also a reason to check your own MyIR statement rather than trusting it blindly. Banks aren’t the only ones who get this wrong — a PIE provider recently attributed a client’s PIE income to someone else entirely, though that one was a single phone call to fix. These errors don’t announce themselves. They sit quietly, understating or overstating income, until someone who knows what they’re looking at goes looking.

That’s the part of the job that never shows up on an invoice: catching what shouldn’t be there, knowing exactly which door to push on, and not accepting ‘that’s not our department’ as a final answer. By the time a client sees their number, it’s the right one because someone refused to file it until it was.

In the meantime, the Banking Ombudsman is now involved, and everybody has some explaining to do.

How we can help

Behind every clean return is someone catching what others miss. If you’ve ever glanced at your financial documents and taken it at face value, it might be worth a second look. Get in touch with our expert team, and we’ll go through it properly, so nothing slips through our watch.

Disclaimer: The views expressed in this article are personal and reflect one adviser’s experience with a specific case. They don’t represent formal legal, tax, or financial advice, and shouldn’t be relied on as such. Company and individual details have been described in good faith based on direct experience; any errors or updates in the situation described are the responsibility of the institutions named, not this article.