Inland Revenue Cracks Down on Unpaid Tax

After years of flexibility during the pandemic, the department is stepping up efforts to collect overdue payments and close a growing tax debt gap.

IR has sent out tens of thousands of notices warning that deductions could be made from bank accounts to recover unpaid tax. These actions have already pulled in millions of dollars, and more recoveries are still underway. The focus is on individuals and businesses that have ignored repeated reminders or failed to engage with Inland Revenue about their debt.

The government’s latest data shows total tax debt across the country has climbed to around $9 billion. During COVID-19, IR adopted a softer approach to help struggling taxpayers manage their obligations, often allowing deferred payments. Now, as the economy stabilises, the agency has received new funding to strengthen enforcement and ensure debts don’t spiral further.

This tougher stance is supported by technology. With upgrades to the MyIR online system, Inland Revenue can now access and analyse more financial data, helping it locate funds in accounts more effectively. If a taxpayer continues to ignore communication, IR can authorise direct deductions or arrange for money to be taken from wages.

While these actions sound severe, the department’s preference is still to work with taxpayers rather than against them. Setting up an instalment plan early is usually straightforward and helps avoid unexpected deductions or penalties. Ignoring notices, on the other hand, increases the risk of more forceful recovery measures.

Tax specialists have also warned that some businesses have been using unpaid GST or PAYE funds to ease short-term cash flow pressures. As Inland Revenue intensifies its collection activity, that strategy could quickly backfire.

For everyday taxpayers, the message is clear: don’t wait to be chased. Check your MyIR account regularly, make sure your details are current, and contact Inland Revenue if you’re behind on payments. Being proactive can help you stay in control of your finances and avoid the stress of having your account unexpectedly tapped by the tax department.