22 Mar 2012
We refer to Ms Ng Lee Koon’s letter 'Can banks pay Govt bodies without one’s knowledge?' (12 Mar 2012). We have since written to Ms Ng to clarify on the issue of appointment of banks.
A taxpayer may sign up for a GIRO instalment plan to have his taxes deducted on a monthly basis via his bank account. If he does not have such plan, he has to pay his taxes within one month from the date of the income tax notice of assessment (NOA).
A taxpayer who does not pay by the deadline will receive a Demand Note, informing him of a 5% late payment penalty and asking him to pay within a given time frame. If he still does not pay or does not contact us for a payment arrangement, we will seek to recover the taxes through other means, including appointing his bank or employer as his agent to pay the outstanding tax to IRAS. The agent is required, under section 57 of the Income Tax Act, to pay over the amount of tax owed to us from the money held for or on behalf of the taxpayer. This form of recovery of overdue taxes is commonly practised by many other tax authorities.
We send out letters to taxpayers who do not pay on time to remind them of the possible tax recovery actions that may be taken by us. When we appoint banks or employers as agents, we also inform the taxpayer of such appointment. Whether the appointed agent informs the taxpayer depends on the practices of the agent. In Ms Ng’s case, we understand that DBS Bank had informed her of IRAS’ appointment, and that it is the standard practice for DBS Bank to inform their customers of such appointments.
We encourage taxpayers to pay their taxes via GIRO to enjoy 12 months of interest-free instalment payment and avoid missing payment dates. Taxpayers may also sign up for SMS alerts at myTax Portal (https://mytax.iras.gov.sg) to receive alerts when their NOAs are issued.
We thank Ms Ng for the opportunity to clarify.
Claire Chua (Mrs)
Director (Corporate Communications)
Inland Revenue Authority of Singapore