Karen Saunders
Karen Saunders

Life, the Trirds ...

Hi. I would like to introduce myself and give you a background of my personal situation before I proceed with my story. My name is Karen and I operate a small clothing business out of my home. I am married to John and we have three growing boys. After a traumatic birth in 1990 I suffered from post-natal depression. I soldiered on as I had two other children, plus a baby to look after. In an effort to help with our finances I set up my own business. Initially I worked on my own, so I was available for my family. As business increased I was able to take on out-workers. In September of 1994 I was diagnosed by the Department of Psychiatric Medicine at the Christchurch School of Medicine as having a severe major depressive disorder. This was brought on partly through post-natal depression, and partly from deep-set childhood trauma. I was immediately put on medication. Although I appeared to be well on a mood assessment, it took many, many months to re-establish normal social functioning. During this period, 1994-1997, I fell behind with GST and PAYE and ACC levies. As I have already said, I was not capable of normal social functioning, ie, I couldn't physically get out of bed some mornings. I left the running of the business to a friend, and relied on out-workers. I would not answer the phone or read the mail. I was totally disinterested. My husband had given up full-time employment to care for me, and took on part-time work. The money that I had previously put away for the tax department was used to pay staff. I thought that I would be able to catch up at a later date.

Having never run a business before, I did not have the appropriate skills to deal with it all and I was unaware of the warning signs. Any letters I received, especially those from the Inland Revenue, were put into a drawer, as they all appeared to be statements, running totals, etc. I thought they were relatively unimportant, and I would be better off coping with them when I felt more able. The IRD had never contacted me regarding the fact that I was behind with my payments, and now I believe that they never intended to. The debt would still be increasing had I not asked my accountant to look into it and contact them. I would like to say that prior to this, I had contacted the IRD myself of two occasions and set up arrangements to pay what I owed. (Please note the word arrangement which is totally different from the word agreement — between two or more people. ) I was unable to maintain these payments. In late 1996 I was told by an IRD staff member to sell my home. I was concerned that there had been no follow-up when my payments lapsed. This is not common business practice, but is the way in which the IRD operates.

The IRD calls GST and PAYE trust money; the small business owner is forced by law to collect his money, without being paid, and hand it over to the IRD.

During this time there was a lot of correspondence between IRD and myself. Two letters in particular deserve mention. On 12 August 1998 I received a letter from a Team Leader who shall remain nameless.This letter contained a serious error — the amount owing on PAYE was shown as $46,802.52. The correct amount should have been $6,802.52. This caused me to become extremely upset. I went into a spin. I felt unwell and disoriented. In fact, you could describe my state at that time as a 'dreamlike trance'. I telephoned the IRD Team Leader immediately, only to find that not only had she got the amount wrong, but she had given me the wrong telephone number! Well, anyone who finds themselves on the end of the IRD telephone system will know how annoying this is, especially when you can wait up to half an hour for a response. This seems a lifetime when you feel unwell. Finally I reached the Team Leader. (That word conjures up pictures of IRD staff dressed as cheerleaders, with little black and white outfits and 'IRD' stamped in black on their butts. I think it's meant to make them appear user friendly.)

The Team Leader told me there hadn't been a mistake. "If that's what the letter says then that's what you owe us." I was crying. I said, "What about my family?" She said she couldn't care less about all that, "If you don't pay that amount within two weeks we will bankrupt you."

I telephoned John to come home from work immediately, to make sure it was not my mistake. He phoned the IRD and was told the same story. He told the staff member that it must be a mistake, could she check the figures? She refused to do so. He asked her if she was aware his wife had a serious medical condition but she said she had made her decision and if we didn't pay, "We will bankrupt you."

She was only interested in collecting the 'trust money' and would use whatever means to do so. John had asked if he could perhaps speak to someone higher, to which he was told, "I have the authority to oversee your case." John set up an appointment for two days later.

Later that evening I rang my sister and told her that I couldn't take any more. "I have come to the end of my tether," I said. "I feel like topping myself." I had even mentioned this in front of one of my sons so the next day I went along to my doctor who immediately increased my medication.

Unbeknown to me, my sister Patty, who is very forthright, had faxed a letter to Jenny Shapely, Max Bradford, the IRD, and the Commissioner of the IRD. Her fax pulled no punches; she told it to them like it was. On the day of the appointment with the IRD, I just couldn't cope, so I asked my husband John to go along on my behalf. "Tell them that we are seeking help from our local MAP," I said.

The IRD were very unhappy when he told them that; "So this is ministerial now is it?" was their attitude. John said I was just exercising my rights. As John was leaving, one of the IRD staff asked John whether I had a sister called Patty. When John said I did, the staff member said she was offended at what Patty had written in the fax. I wondered how she had found this out, as my sister said she had not identified me or John, or given her surname in the fax. It was obvious that this IRD staff member had gone to a lot of trouble to match us up.

In the next letter to the IRD John apologized for the fax and asked whether we could have that particular staff member removed from our case, as we thought that it had become personal. This request was ignored. John and I went along to our first meeting with Jim Anderson. He was interested in acting on our behalf, said he would look into it and get back to us. In the meantime we were incurring penalties of $800 per fortnight. The IRD had at this stage asked us to write out a budget. We were questioned on why we thought we had to spend so much on food, and why we had a superannuation scheme in place ($20 per week), when we owed the tax department money. All this goes totally against their advertising.

On our second visit to Jim Anderton I took my sister, Patty, along, who had received a reply from Max Bradford. Jim greeted her somewhat frostily — he clearly did not appreciate her being there. During our conversation Jim called us criminals, and thieves of taxpayers' money, and yes, we would have to pay the money to the IRD. It was at this stage I told him that it was always our intention to pay the core debt, butt was the penalties that were crippling us. We have never been in trouble with the law, and we always complied with the IRD by furnishing our returns. I thought we were being treated rather harshly. My sister asked whether or not my medical circumstances should have — or could have — been applied, under an Act made available to the taxpayer. Jim merely dismissed this with a wave of his hand. He wasn't even interested in going down that road, he told Patty, and she wasn't even helpful in sending the fax to the IRD as this would have simply put the IRD offside with John and me. My sister was incensed that this attitude could be taken, and told Jim that at least it got the matter to the top. She also asked how much bonus money the IRD was likely to receive on my taxes when collected and he replied, "I don't think they get paid enough." He then turned his attention back to me and said, "Look, I think you should pay all your taxes and get on with your life. Do you know I have other constituents that have had to sell their family home as they have gambled away their money, and I have another husband and wife who are in their sixties, who are both working as cleaners to pay back debts they owe. You two are lucky. At least you can get a mortgage."

We told him that 80 per cent, if not more, of our house is owned by the bank and to pay this debt we couldn't raise the money on my husband's wage alone, it would have to be taken out under my name. I was distressed to think that all along this man seemed to have a cordial relationship with the IRD. I though he could have helped more. My sister mentioned that she had received a reply from Max Bradford and Jim said she shouldn't believe all that MPs wrote. She asked him, "Does that mean all MPs, Jim?"

After a while we agreed to let Jim negotiate some of the penalties being waived. He told us that in order to do that we would have to come up with a realistic figure. Remember, our original core debt was only $12,000 — the rest was penalties. We gave him what we thought was a reasonable figure, only to be told that it was not enough. On leaving, Patty said it was her opinion that this was already a done deal, a case of who can pay versus who can't, it had absolutely nothing to do with a disability. I would like to point out that Patty is disabled, and works as an independent advocate.

On several occasions I asked the IRD to provide me with a complete list of every transaction that I had with them. The reason for this was to clarify what was the core debt. This list has never been supplied and I wonder whether this was deliberate or that they did not actually know what the exact figure was.

A few days later I read an article in the paper quoting Rodney Hide as saying that the IRD had driven people to suicide. I faxed him my file and he rang me immediately. He had an appointment in 24 hours with David Carter and the IRD Commissioner. He rang me several times to see how I was coping. This annoyed Jim, who was still working on our behalf. At this point I would like to add that my mother was in hospital dying from cancer and I was unable to spend as much time with her as I would have liked. All my energy seemed to be focused on saving ourselves from bankruptcy. I wanted this over and done with as quickly as possible, so when Jim Anderton rang to say he had meet with the IRD and put it to us by way of a verbal agreement, I felt under enormous pressure to agree. This effectively dried up any work that Rodney or David could do.

I feel in hindsight this was a "Hurry up. Get an agreement. One she can't back out of" kind of thing. David Carter came to my home to discuss my tax bill and to pick up a cheque. On entering the property the IRD staff member commented, "Nice home."

Boy, should I feel honoured. Two top government officials from separate parties and still we can not find the answer. I sent the IRD two further copies of medical reports and they failed even to acknowledge that they had received them. I have to ask why, during this sorry saga, were not my medical reports applied? Who makes the decision on whether these records apply or not and how many people in the IRD have access to 'strictly confidential' reports? I am sure that had I committed a major crime, such as murder, then yes, of course my medical details would have been relevant.

Conclusion:

Why is a company which goes into voluntary liquidation, owing the IRD $200,000, allowed to start up a business a month later? Why didn't the IRD take into account the $10,000 I lost when a company I had done work for folded owing me money? Why are taxpayers' cases individually assessed on circumstances? Why allow done deals? (Though they would never admit to this.) I thought that these tax laws were for the big boys, not to screw small businesses which the IRD know can't afford corporate lawyers.

Acknowledgment: To my husband John, who gave me unwavering support, and to Rodney Hide, my knight in shining armour. You have worked with tireless dedication.


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