An independent inquiry must be held into the Revenue Commissioners' tax-collection record, an Oireachtas commitee has said, following reports that PAYE taxpayers could be paying up to €500 million a year more to the exchequer than they should.
"The Revenue is proficient in the area of tax collection, as indeed they should be. However, Revenue has an equal duty to demonstrate the same proficiency to people who overpay tax," the Oireachtas Finance and Public Service Committee said.
Hundreds of millions of tax allowances, from train tickets to medical expenses to trade union dues, lie unclaimed annually because taxpayers are unaware of their entitlements and they are restricted to claiming back only the last four years of overpayments if they do realise they have paid too much.
The four-year rule, brought in by Charlie McCreevy during his time as minister for finance "is beginning to really bite" and should be scrapped immediately, the Fianna Fáil chairman of the committee Seán Fleming said.
"It was brought in as a matter of administrative convenience and I have no doubt that it is convenient for the Revenue, but they should be required to repay overpayments for all years, not just four years, if overpayments have been made."
TDs are now encountering cases where Revenue is pursuing some people for tax due over many years, but it will not credit them for overpayments they may have made in some categories over more than four years, Labour TD Joan Burton said.
The Revenue said it had improved its communications by creating a website, an 1890 telephone service for PAYE earners, simpler forms and text services, along with publishing details on Aertel page 451.
Some of the tax allowances left unclaimed were extremely valuable, Mr Fleming said.
Just 320,000 people are claiming allowances to which they are entitled for trade union membership dues, even though this is just half of the number of trade unionists in the State.
Though no hard and fast figures exist, the Revenue should be able "from the information available to them" to compile reasonably accurate estimates.
"It is only against such a yardstick that the efficiency of the Revenue Commissioners in supporting the ordinary taxpayer in this area can be measured," said the detailed report.
Currently, the Revenue spends nearly €2.2 million on advertising and public relations, though the committee questioned "the effectiveness and value for money of this expenditure".
The language in most of the Revenue's publications is "overly officious and unintelligible to most taxpayers", with many taxpayers failing to understand their entitlements.
However, the Oireachtas committee said that not all of the blame could lie with the Revenue, since many taxpayers are wary of approaching it.
"The general public has little difficulty in understanding the welfare system, where payments are being drawn down. However, there appears to be an unwillingness or fear in dealing with the taxman."
More tax reliefs should be given at source, as already happens with mortgage interest relief, since this would require "minimal intervention" by the taxpayer.
The Department of Finance said some improvements had been made in this year's Finance Bill, including the automatic crediting of all age-related tax credits.
