Due to major staff shortages, the Tax Authorities have not been collecting recoverable tax debts for almost two years, including the corona debts of entrepreneurs. Bailiffs have not been deployed since October 2023, according to an internal note from the service. According to the Tax Authorities, virtually no collection of these debts constitutes a “risk”, because entrepreneurs will comply with tax legislation less if they notice that the Tax Authorities do not enforce them.
This is stated in a report from the Court of Audit on the collection of corona tax debts, which was presented to the House of Representatives on Tuesday evening. According to research by the Court of Audit, there are 35,000 entrepreneurs who have received a writ of execution for non-payment of a deferred tax debt from the corona period. Entrepreneurs who did not pay after this injunction subsequently received ‘hardly’ any coercive measures.
Without these coercive measures, at least 2.9 billion euros in corona debts will not be collected, the Court of Audit expects. “Depending on the efforts of the Tax Authorities,” this also applies to another 2.8 billion euros in corona debt among entrepreneurs who do repay their debt, but are behind in payments. In addition to the corona debts, there is also another 6.5 billion euros outstanding in unpaid claims, which require reminders and other coercive measures, according to previous research by NRC.
The Court of Audit’s report also shows that responsible State Secretary Marnix van Rij (Tax, CDA) did not fully inform the House of Representatives about the situation. According to the Court of Audit, Van Rij only mentioned that the Tax Authorities could no longer perform all their tasks from the beginning of 2022 due to a staff shortage and therefore had to set priorities, in an appendix to a letter to Parliament about the revision of the tax system in June 2022.
“The information sent to the House of Representatives does not explicitly describe what exactly the ‘negative impact on the level of supervision’ entails and how large the capacity shortage is,” the Court writes.
No capacity at all
According to the Court of Audit, the State Secretary has also “regularly” reported to the House that the government would offer entrepreneurs “customization” when paying off debts, while internal notes from 2021 indicate that there was no capacity at all for that customization.
The department at the Tax Authorities responsible for the collection of outstanding tax debts is short of a thousand employees to do its work properly. Eighteen hundred people now work there, while the department needs almost three thousand. Almost all employees are concerned with the “continuity” of the department. There are barely enough employees left to process objections and appeals from citizens and entrepreneurs, the Court of Audit discovered. A response follows on average after twenty weeks, although the legal maximum response period is twelve weeks.
There are simply no employees available for other activities, such as monitoring collection. The Tax Authorities expect that these shortages will certainly continue into 2024.
The report shows that the staff shortage across the Tax Authorities as a whole is greater than previously known. The service will need 12,000 new employees in the next five years. The Tax Telephone, where companies and citizens can go with questions about taxes, has also been struggling with major staff shortages for a long time, which meant that hundreds of thousands of citizens were not answered last year.
Holland Casino: debt of 249 million
The problems at the Collection department are a symptom of the major and structural problems that the Tax Authorities have been struggling with for years. For example, there are concerns within the service about “high risks” in the collection of around 100 billion in taxes. Keeping outdated computer systems running also consumes a lot of capacity and poses risks.
The size of the outstanding corona debts varies widely per company, the Court of Audit writes: from 8 euros to 1.3 billion. The vast majority of debts are held by SMEs and self-employed people without employees, especially in the retail, construction and research and consultancy sectors. There are also 5,000 large companies that still have an outstanding corona debt. For example, according to the Court of Audit, Holland Casino has an outstanding debt of 249 million.
Another large company, which the Court of Audit does not mention by name, has an outstanding tax debt of 432 million euros, of which 146 million is corona debt. According to the Tax Authorities, the chance of still being able to collect these amounts is “extremely small”. It is not clear why the Court of Audit keeps this company anonymous.