ATO Firmer Action: Act now for positive tax debt resolution

Introduction

At Tax Assure, we speak to the Australian Tax Office every single day. We’re on a first name basis with most of the crew in the various debt sections. So we often get helpful direct information about their areas of focus… and how best to work with those.

We want to share some of this intell with our partners and clients, and share why you or your clients need to act right now if you have outstanding tax, plus how we can help resolve that with positive outcomes for all.

The importance of engagement

The ATO recently shared that they will continue to work with and support individuals and businesses who have tax debt, if they actively engage with the ATO.

In the same breath, the ATO were clear about ramping up debt recovery for those who sit back with their heads in the sand and hope their problem will all just go away.

While the ATO understands that many have been doing it tough, the takeaway here is the importance of engagement with the ATO. Without this, the ATO are unable to assist and will rely on enforcement action. This may move things into the a section of the ATO known as ‘Firmer Action’.

We will explain what’s involved with the ATO taking different types of firmer action (and especially how to avoid it), but first, a quick look at how it’s been for the past 18 months.

Tax debt and COVID

The ATO’s collectible debt increased by a whopping 30% during the early parts of COVID.

This was due to the ATO allowing individuals and businesses to defer the payment of their lodgements. It was well-received, much-needed relief at the time. But as we reported back in November 2020, this resulted in a significant increase in tax debt.

And that tax debt does eventually catch up with us. We always knew the ATO would move back into collection mode – the government can’t afford for it not to – and so we find ourselves in a situation where the ATO is needing to move into collection and enforcement.

So, what does firmer action mean?

We are now effectively back to pre-COVID times (when it comes to tax debt collections).

There has been a noticeable uptick in activity from the ATO, particularly in firmer action enforcement directed towards those who ignored the ATO’s correspondence and calls; or simply failed to re-engage with the ATO.

These actions can include:

• Garnishees;
• Director Penalty Notices;
• Claims or Summons;
• Bankruptcy;
• Creditors Petitions;
• Statutory Demands;
• Wind Up Applications; and
• Debt Collectors.

We have seen post-COVID  firmer action already taking place,  with clients coming to us needing urgent assistance. A couple of recent scenarios include:

• A client who received calls from debt collectors. She contacted us straight away and we were able to obtain a fast resolution.
• Another client came to us having received a Statutory Demand. We’ve ensured they were placed back into a compliant position within the 28 days.

So, it’s happening.

The scariest part of this for many of our clients is the personal liability involved in debt if you’re a company director. The fear of losing the business, its assets AND your family home seems unthinkable, but it is real.

How to resolve tax debt

The key is to engage with the ATO. That’s the first step in every case. Turning your back on the problem is the worst possible thing to do – even though it’s very tempting.

But don’t think that re-engagement mean the need to repay the total debt immediately. That is simply not a solution for most of our clients – which is why they’ve been ignoring the problem for so long. Working with Tax Assure means there are a number of options available that can be tailored and negotiated for the best outcome.

In the same way as a the ATO has many options to recover unpaid taxes, you also have options in terms of how you deal with those unpaid taxes, while becoming (and then remaining) compliant in terms of your tax obligations.

Tax Assure has helped many individuals and businesses with tax debt in Australia.

Here are some ways we can help you with getting back on track:

• Tax Debt Evaluation;
• Tax Debt Negotiation & Resolution;
• Payment Plan Optimisation; and
• Interest & Penalties Refunds.

These options mean there are a variety of solutions (not just payment of the debt in full) for you, or your clients… you don’t need to ignore it or put it off any longer.

So, to answer the question, “can tax debt be negotiated?”, the answer is: YES!

“We use our decades of experience to devise and present a compelling resolution proposal to the tax office on your behalf. This will include a debt repayment plan which is financially sustainable for you – vital to ensuring you achieve ongoing compliance and stay in control.

With this latest news from the ATO, it’s clear that now is this time to act! If you have any outstanding tax debt concerns which are concerning you, tackle them now and don’t bury your head in the sand any longer.”

Tax Assure can help you or your clients

No matter how you view your situation at the ATO, we can help you navigate the best strategy to avoid or reverse firmer action from the ATO, plus provide you with the best outcome so that you can continue to run and operate a viable business.

With Tax Assure on your side, you’re in safe hands. Contact us today if you, or your clients need help getting back on track. We’d love to help.