ATO sends bounty-hunters after late payers

ATO sends bounty-hunters after late payers

Debt collectors hired by the Tax Office are putting prices on the heads of tax debts, with individual operators promised bonuses and incentives to "convince" debtors to pay-up.

Tax Office unions are on the warpath, saying taxpayers might find themselves subjected to high-pressure tactics from debt collectors chasing a payday for bringing in outstanding taxes.

Senior ATO management has assured angry unions it will investigate after Recoveriescorp, a firm that handles outsourced debt collection work for the government agency, tried to hire collectors for its tax team, promising them incentives and bonuses.

The Tax Office said in a statement that it paid its debt collectors a flat fee for each case and that if collections agencies paid bonuses or incentives to their employees, then it was a matter for them.

The court found Local Blue Pages created a fictitious debt collection agency.

The court found Local Blue Pages created a fictitious debt collection agency. Credit:Louise Kennerly

Revenue-linked bonuses or other financial incentives for recovering outstanding tax revenues are a sensitive topic in the ATO.

The idea of bonuses for in-house tax officials has been floated more than once by ATO management over the decades but shot down amid fears it might lead to conflicts of interest, heavy-handed tactics or even corruption.

The recruitment ad, for six debt collectors to work on Recoveriescorp's "high performing" tax team in Melbourne, explicitly offers the "potential to earn bonuses and incentives".

"You will use your rapport building, influencing and negotiation skills to convince these people to pay back the money they owe and in turn, helping them to overcome their financial difficulties," the ad states.

Recoveriescorp did not respond before deadline on Tuesday to a request for comment.

But the Australian Services Unions is furious about the idea of bonuses being paid for the recovery of tax debts.

Union official Jeff Lapidos says the idea has been shot down in the past because it opened the way for a glaring conflict of interest if revenue-linked bonus payments are offered to public servants employed by the ATO.

He said the risks were greater for employees of external contractors who operated outside of the Australian Public Service code of conduct and who may not follow the strict requirements for tax officials to explain to a taxpayer their rights and options.

"The Tax Office is wrong to say the ATO is not responsible for its contractors paying bonuses to their employees for their success in collecting the ATO's debt," Mr Lapidos said.

"It creates a conflict of interest in breach of the Public Service Act.

"It is shocking that Commissioner Jordan is prepared to allow this to continue."

An ATO spokeswoman said the Tax Office did not have input into the business models of its contractors.

"The ATO continues to utilise external collection agencies and considers their services an integral part of our debt collection strategy," the spokeswoman said.

"Payments to agencies are based on a flat fee for service per case basis, regardless of the dollar value of the debt or the type of debt referred, or the amount recovered.

"The business model of our external suppliers is not something that the ATO has input into, their services are procured using comprehensive tendering processes and all activity is managed via a comprehensive governance framework."

Noel Towell is State Political Editor for The Age

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