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Keep an eye on tax payments from your bank 14 Sep 2012

 WE HAVE come across two cases recently of a bank underpaying a client’s tax.

In the first instance, the bank wrongly dishonoured a payment because it credited a deposit a day late. In the second case a cheque made out for $5000 was read as $50 in spite of the words clearly stating the amount as “five thousand dollars”.

In both cases the two banks tried to avoid admitting responsibility. After some argument, they both admitted their errors but this left the clients exposed to late payment penalties.

IRD announced some time ago that a bank error would not be an acceptable excuse for cancelling penalties. If this ever happens to you, you might have to insist on the bank paying. A bank can be sued. Some years ago a bank wrongly dishonoured a cheque. The customer sued the bank for damages to his reputation – and succeeded.

 

One of our clients, who uses internet banking, set up payments in advance for income tax and GST. He had five payments to make.

At 5pm on the last day for payment, he was just about to go home and thought it would be a good idea to make sure all the payments had gone through. Four out of five had. The remaining one was flagged as pending even though there was twice as much cleared funds in the account than was needed to cover the payment.

Luckily, he was able to get through to his bank manager on the phone, who in turn spoke to the section of the bank that was responsible. The matter was cleared up with a promise to pay the tax penalties if the payment didn’t go through as requested.

The client  quite sensibly said next time he would check at the beginning of the day if his payments had gone through.

As stated above, it can be quite difficult to persuade a bank they have erred. Even if you are successful, you may find getting satisfaction takes a lot of time.

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