Finance officials will start writing to companies next month asking them to outline their payback plans for billions in tax debt they’ve been storing up during the pandemic.
The new notice, addressed to 84,000 companies that owe €2.8 billion in back taxes in 2020 and 2021, will urge taxpayers to contact the IRS before an interest-free period ends on December 31 .
Businesses that don’t fully pay off their debt by then must apply for a phased payment agreement (PPA), which can include a lump sum payment of up to 40 percent of the amount stored.
Most companies that choose to roll over the remaining debt into the next year can expect to pay a reduced 3 percent interest rate on the outstanding principal. Normal interest on overdue taxes is between 8 and 10 percent.
But 21,000 companies hit by Omicron restrictions earlier this year can park their debt until May 2023 under an extension introduced by Treasury Secretary Paschal Donohoe in January.
To date, 343 companies have voluntarily signed PPAs over €11 million ahead of the deadline.
The IRS is urging businesses to pay off their debts immediately or set up PPAs as soon as possible, rather than waiting until the deadline approaches, as payment schedules require clerk approval.
Tax officials were forced to send warning letters to 10,000 companies under the debt-stocking program in May, urging them to file late tax returns or risk losing access to the program.
Revenue has confirmed to Chartered Accountants Ireland (CAI) that both stored and other tax liabilities can be consolidated in a PPA to facilitate repayment. Taxpayers will be required to make a 25 percent or 40 percent down payment, depending on tax clearance status, they said.
Revenue also confirmed to CAI that officials would take a “flexible and pragmatic approach” to debt repayments based on financial circumstances.
The debt-stocking scheme was put in place to provide financial support to companies experiencing downturns due to the Covid-19 pandemic. The total debt of the 250,000 companies eligible for the program since its inception in April 2020 was 31 billion euros.
The Finance Ministry estimated last year that about a quarter, or €800 million, of taxes owed by companies in the program ultimately go unpaid.
Separately, companies that have received Employment Wage Subsidy Scheme (EWSS) payments must complete their final eligibility review by September 30 if submissions are required to correct invalid claims.
The IRS has asked representative tax authorities to remind their members that any employer who has even applied for the subsidy since it was introduced in August 2020 must review their payslip.
Employers who are satisfied that all their payments are valid need not take any further action. Those who discover discrepancies must submit the documents and make corrections before the deadline.
A total of 548 employers repaid all grants of €57 million and 4,278 partially repaid €76.8 million.
https://www.independent.ie/business/irish/revenue-to-seek-plans-for-covid-tax-debt-repayments-from-companies-owing-28bn-41967202.html Revenue seeks plans for Covid tax debt repayments from companies owing €2.8 billion