In his report released today, the Commonwealth Ombudsman has expressed concerns about how the Australian Tax Office has handled complaints about compromised Tax File Numbers (TFNs).

The report examines eight case studies where taxpayer’s TFN had been compromised or incorrectly linked by the ATO to another person’s TFN.

‘The action taken by the ATO to deal with these complaints was unreasonable. Our investigations have shown a systemic failure by the ATO to properly recognise and respond to the issues faced by taxpayers,’ said Ombudsman, Allan Asher. ‘When this unique identifying number is compromised the impacts on a taxpayer can be significant. It can cause delayed refunds and payments, debts being incorrectly attributed to the taxpayer or problems with other agencies like Centrelink, where information is exchanged.’

In the case of Mrs D, her difficulties began when the ATO wrongly determined that she had two TFNs. In fact, Mrs D only had one TFN and the other number belonged to another taxpayer. The error meant that Mrs D had income incorrectly attributed to her.

This was upsetting and difficult to resolve, not least because English is not her first language. Mrs D complained in writing but nothing happened. Finally, after two years and an Ombudsman investigation, the TFN confusion was sorted out.

In Ms G’s case, an unknown person used her TFN. Ms G was receiving a Centrelink benefit and the illegal use of her TFN led to a $7,000 Centrelink debt and an ATO penalty of $2,250. It took two years and an Ombudsman investigation for this to be resolved.

The ATO agreed with all five recommendations in the Ombudsman’s report and said that it is already taking action to improve its response to tax file number compromises.

‘However, further complaints we have received show that the problems are far from solved and the actions taken by the ATO to date, while a start, do not fully address our concerns,’ the Ombudsman said.

During the last nine months the Ombudsman has received twice the number of complaints on this issue than it did in the whole of 2009.

‘I encourage the ATO to consider each of my recommendations and how positive change might be brought about,’ Mr Asher said.

‘We will be monitoring the progress of the ATO in its tackling of these difficult cases, in particular the effectiveness of the enhanced procedures that the ATO says have been implemented,’ he said.

Download the report: Australian Taxation Office, Resolving Tax File Number Compromise, September 2010—12|2010

Media contact: Media 02 6276 3759

Date of release: 21 September 2010

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      21 Sep 2010: Compromised Tax File Numbers – a problem still to be solved

      In his report released today, the Commonwealth Ombudsman has expressed concerns about how the Australian Tax Office has handled complaints about compromised Tax File Numbers (TFNs).

      The report examines eight case studies where taxpayer’s TFN had been compromised or incorrectly linked by the ATO to another person’s TFN.

      ‘The action taken by the ATO to deal with these complaints was unreasonable. Our investigations have shown a systemic failure by the ATO to properly recognise and respond to the issues faced by taxpayers,’ said Ombudsman, Allan Asher. ‘When this unique identifying number is compromised the impacts on a taxpayer can be significant. It can cause delayed refunds and payments, debts being incorrectly attributed to the taxpayer or problems with other agencies like Centrelink, where information is exchanged.’

      In the case of Mrs D, her difficulties began when the ATO wrongly determined that she had two TFNs. In fact, Mrs D only had one TFN and the other number belonged to another taxpayer. The error meant that Mrs D had income incorrectly attributed to her.

      This was upsetting and difficult to resolve, not least because English is not her first language. Mrs D complained in writing but nothing happened. Finally, after two years and an Ombudsman investigation, the TFN confusion was sorted out.

      In Ms G’s case, an unknown person used her TFN. Ms G was receiving a Centrelink benefit and the illegal use of her TFN led to a $7,000 Centrelink debt and an ATO penalty of $2,250. It took two years and an Ombudsman investigation for this to be resolved.

      The ATO agreed with all five recommendations in the Ombudsman’s report and said that it is already taking action to improve its response to tax file number compromises.

      ‘However, further complaints we have received show that the problems are far from solved and the actions taken by the ATO to date, while a start, do not fully address our concerns,’ the Ombudsman said.

      During the last nine months the Ombudsman has received twice the number of complaints on this issue than it did in the whole of 2009.

      ‘I encourage the ATO to consider each of my recommendations and how positive change might be brought about,’ Mr Asher said.

      ‘We will be monitoring the progress of the ATO in its tackling of these difficult cases, in particular the effectiveness of the enhanced procedures that the ATO says have been implemented,’ he said.

      Download the report: Australian Taxation Office, Resolving Tax File Number Compromise, September 2010—12|2010

      Media contact: Media 02 6276 3759

      Date of release: 21 September 2010