Oops! Taxman's $116,000 blunder

STEPHEN Thomas has never owed the Australian Tax Office $116,000.

However, that did not stop the taxman having half Mr Thomas' fortnightly salary docked to start paying off the debt, while he and his family were on holiday in America.

The tax office has since admitted that it was all a case of mistaken identity.

THE money has been repaid, but the Thomases are angry.

Mr Thomas and his wife Angela discovered the mistake when they returned to their Twin Waters home on Tuesday and opened a letter from the tax office.

They found a “Section 260-5 Notice” which said Mr Thomas’s employer had been instructed to dock his machinery operator income he had repaid his debt – supposedly $116,398.58 – in full.

A quick check of their bank account confirmed this had already happened.

When Mrs Thomas phoned the tax office, she was told another letter had been sent, apologising for the error.

“They said it was a case of mistaken identity and his employer had been advised to repay the money,” she said.

“We’ve been trying to get hold of the (payroll) department to check this had happened.

“The lady I spoke to said there had only been a few numbers separating us from the other person who owed the money.”

First Mrs Thomas was “physically sick” because of the incident, then she became “angry”.

“I’m really angry, how can they have the right do this,” she said.

“No one called us (querying the debt), there was no warning or chance to respond – the letter simply advised that Steven’s employer had been told to dock his salary.

“The (ATO’s) letter was dated April 15, we went on holiday on April 17 and it must have arrived after we left.

“We’re just an ordinary couple, earning an ordinary income – to have that kind of debt you’d have to be earning over $400,000.”

The couple now face the extra cost of paying an accountant hired to help get to the bottom of the matter, as well as the stress of having to deal with Mr Thomas’s payroll department to make sure he wasn’t underpaid or had any black marks on his payroll file.

They also needed to check their credit rating hadn’t been impacted.

The tax office’s “blasé” response fuelled their anger.

“The lady (from the tax office) said ‘oh well, it’s sorted now’, but she has no idea of the stress she put on us,” Mrs Thomas said.

Mrs Thomas also wondered how often this mistake occured.

“I can’t believe they couldn’t recognise the mistake, my husband earns a modest wage – you’d think they’d investigate before demanding $116,000.”

But the tax office wouldn’t even be able to tell how often this happened to them or others as a spokesman told the Daily yesterday it “does not record this information”.

They’d also be unlikely to claim compensation with the ATO website advising generally no claims for losses would be considered for “stress, anxiety, pain and suffering or other emotional distress”.

The spokesman said “in most cases, the ATO only uses the Commissioner’s garnishee powers after the taxpayer has failed to work with to address their tax debt and has been provided with a warning about possible firmer or legal recovery action.”

Matt Richards from Accounting North said his firm had never seen anything like this before.

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