Section 17 notices (Oct 99) (WITHDRAWN)

Introduction

This standard practice statement outlines the procedures Inland Revenue will follow when issuing section 17 notices, and third party information request letters, pursuant to the Tax Administration Act 1994 (TAA). Appendix A provides copies of the section 17 notices, and third party information request letter, used.

This standard practice statement is effective from 1 October 1999.

Generally, where information is publicly available Inland Revenue will not use section 17 and will meet the usual charges, e.g. Land Transfer Office, Companies Office, Quotable Value New Zealand etc.

Background

Section 17 of the TAA is the legislative authority enabling Inland Revenue to require information and inspect books and documents.

Most taxpayers and third parties are willing to cooperate with Inland Revenue requests for information.  Some taxpayers, such as banks, while they are willing to cooperate with Inland Revenue, require legal compulsion before they can properly divulge the information.  Therefore, it is Inland Revenue practice when initially requesting information, books or documents either not to rely upon the section, or to simply state that the request is made in terms of section 17, e.g. to a bank where the request is made about one of their clients.

The reason for this practice is to foster a spirit of fairness, reasonableness, and mutual co-operation with taxpayers and third parties in their dealings with Inland Revenue.  This is considered more appropriate than proceeding from the outset with a section 17 notice that refers to the statutory remedies for non-compliance with the terms of the notice.  This response is also preferred by the major suppliers of information.

The section 17 notice makes reference to statutory consequences of non-compliance and includes a copy of section 17 in full.  If not complied with, a section 17 notice will result in Inland Revenue invoking the statutory remedies as the next step in obtaining the information being sought.

Considerations when issuing section 17 notices

Inland Revenue will have considered the following prior to issuing section 17 notices:

• the reason for requiring the information - the request will be bona fide, and the information required will be necessary, or relevant;
• the impact of the request on the suppliers of information - Inland Revenue will be reasonable in relation to the quantity and/or timeliness for providing the information where there is genuine difficulty in obtaining and/or providing that information;
• the disputes resolution process - this process relies on full and prompt disclosure by both the Commissioner and the disputant; and
• the intention to ensure compliance with the notice - Inland Revenue will invoke the statutory remedies in the event of non-compliance.

Procedures

Generally, a section 17 notice will only be issued following a failure to provide information previously requested, or where specific issues have been identified and an attempt to resolve those issues has failed.  Where it is considered necessary to issue a section 17 notice Inland Revenue will use the following procedures:

1. where an investigation is stalled by non-supply of information (refer notice "A") or, has identified specific issues requiring resolution (refer notice "B") a section 17 notice may be issued.  The timing of issue will be determined on a case by case basis;
   
   
2. where the taxpayer or other entity contacts Inland Revenue and modification of the notice is agreed it will be recorded in writing (refer notice "C");
   
   
3. where Inland Revenue considers a taxpayer has not complied with a section 17 notice an application for a court order, for compliance with the section 17 notice, may be made.  Prosecution action may also be taken;
   
   
4. where non-compliance occurs a follow up notice will be issued stating that the section 17 notice has not been complied with, court orders are being sought and/or prosecution action is being considered (refer notice "D"); and
   
   
5. where prosecution action is taken it may be in tandem with, before or after, seeking a court order, but will not be prior to the issue of a follow up notice (refer notice "D").  Where compliance occurs subsequent to the issue of a follow up notice prosecution action may still proceed, e.g. where a pattern of late response emerges.

In following the above process every attempt will be made to maintain contact with the taxpayer so as to provide an opportunity for concerns to be raised.

Where requests are made to persons other than the taxpayer the procedure usually begins with a letter (refer letter "E").  It may follow a discussion.  Where this request is not complied with the above process, to obtain the information, is commenced.

Note:
Inland Revenue will not reissue section 17 notices in a different format.  Once a section 17 notice has not been complied with the offence is committed and prosecution action, if taken, must be commenced within 6 months of the offence.

Standard Wording of Notices and Letters

The following minimum content will be included in letters and section 17 notices:

• The notice/letter will be typed on Inland Revenue letterhead.  In cases where it is faxed it will still be on letterhead;
  
  
• A section 17 notice will include (refer notices "A" and "B");
  1. a brief background to the requisition
  2. a statement as to why the requisition is made
  3. reference to the legal authority for collecting the information
  4. a statement that the information required is considered necessary or relevant for a proper purpose
  5. a statement that is as specific as the circumstances allow,
  6. an address, time and date for collection which is reasonable relative to the information type and background to the requisition
  7. an offer of assistance or flexibility to enable compliance (i.e. to modify, collection time, collection place, collection date, requisition content) [Note: any change to the date for compliance must be agreed before expiration of the original date.  Beyond this a breach has occurred and an extension of time cannot be given]
  8. a reference to the possible consequences of non-compliance including any defence available
  9. the date of issue of the notice and a copy of section 17, and
  10. signature and position of officer of Inland Revenue.
  
  
• The notice may also include;
  1. an additional request for identification of items, if any, for which legal privilege is claimed, and
  2. a requirement that any written information or particulars furnished be verified by statutory declaration.
  
  
• A follow up notice will include;
  1. a statement that to Inland Revenue's knowledge compliance has not occurred
  2. a statement as to the actions being considered
  3. a list of offences committed
  4. an indication of the maximum penalties applicable to each offence, and
  5. copies of the offence sections including any defence section [i.e. section 143(2), section 143A(2)].
  
  
• The first request to a person other than the taxpayer will refer to section 17 and include a date by which compliance should occur (refer letter "E").  This letter is not to be use to request information that is publicly available.

This Standard Practice Statement was signed by me on 1 October 1999.

Michael Rapson
Manager Technical Standards

Appendix A

Section 17 Notices and Third Party Information Request Letter

Note: The notice/letter must be typed on Inland Revenue letterhead.  The wording in bold may change from notice to notice/letter to letter, however, the wording not in bold will be the same on every notice/letter issued.

Notice "A": Section 17 Notice - Investigation Delayed

Name and address

Attention:

NOTICE TO FURNISH INFORMATION

On (date) (name) wrote to you stating that an audit of your taxation affairs was to be carried out.  You were requested to have the necessary information available when (name) called on (date).

Further access to this information is now required.  Therefore I, (name), (designation), (office),being duly authorised by the Commissioner of Inland Revenue pursuant to section 7 of the Tax Administration Act 1994 (the "Act"), require you pursuant to section 17 of the Act (copy attached) to furnish in writing the information sought below, and produce for inspection the following books and documents which I consider necessary or relevant to establish your correct taxation liability.

The information to be furnished, and the books and documents to be produced for inspection are as follows;

I also require that the written information or particulars furnished be verified by statutory declaration.

Any document covered by legal professional privilege is outside the scope of this notice.  You should consult your legal advisers if assistance is required in determining whether a specific document is covered by legal professional privilege.

(Name)will call at (place and time) on (date) to collect the information.  If you wish to make other arrangements as to collection will you please telephone (name)on .......

If gathering this information is going to be time consuming or otherwise cause you difficulty, please contact (name) on the above number as they are willing to assist.  If you wish to discuss the content or detail of the notice, including any claim for legal privilege, please contact (name)as modifications will be agreed to in cases of genuine difficulty, or where privilege operates.

I point out that failure to comply with this notice may lead to a court order being requested to enforce compliance and/or prosecution action.

However, section 143(2) of the Act states that no person may be convicted of an offence against subsection (1)(b) for not providing information (other than tax returns and tax forms) to the Commissioner, if they did not, as and when required to provide the information, have that information in their knowledge, possession, or control.

Control here is used in its wider sense and includes material held by others on your behalf.

Dated at ………. this …. day of ………., ……

(Name)
(Designation of signatory)


Notice "B": Section 17 Notice - Specific issues identified but unresolved

Name and address

Attention:

NOTICE TO FURNISH INFORMATION

Further to the meeting of (date) several issues remain unresolved.  The following information is requested to progress resolution of these issues and to ensure that Inland Revenue has all the relevant information and books and documents bearing on these issues.

Therefore I, (name), (designation), (office), being duly authorised by the Commissioner of Inland Revenue pursuant to section 7 of the Tax Administration Act 1994 (the "Act"), require you pursuant to section 17 of the Act (copy attached) to furnish in writing the information sought below, and produce for inspection the following books and documents which I consider necessary or relevant to determining the issues which remain outstanding following the investigation.

The information to be furnished and the books and documents to be produced for inspection are as follows;

I also require that the written information or particulars furnished be verified by statutory declaration.

Any document covered by legal professional privilege is outside the scope of this notice.  You should consult your legal advisers if assistance is required in determining whether a specific document is covered by legal professional privilege.

(Name)will call at (place and time)on (date)to collect the information.  If you wish to make other arrangements as to collection will you please telephone (name)on.......

If gathering this information is going to be time consuming or otherwise cause you difficulty, please contact (name)on the above number as they are willing to assist.  If you wish to discuss the content or detail of the notice, including any claim for legal privilege, please contact (name) as modifications will be agreed to in cases of genuine difficulty, or where privilege operates.

I point out that failure to comply with this notice may lead to a court order being requested to enforce compliance and/or prosecution action.

However, section 143(2) of the Act states that no person may be convicted of an offence against subsection (1)(b) for not providing information (other than tax returns and tax forms) to the Commissioner, if they did not, as and when required to provide the information, have that information in their knowledge, possession, or control.

Control here is used in its wider sense and includes material held by others on your behalf.

Dated at ………. this …. day of ………., ……

(Name)
(Designation of signatory)

Notice "C": Section 17 - Agreed Change/Amended Notice

Name and address

Attention:

NOTICE TO FURNISH INFORMATION

Further to the previous notice to furnish information dated (date) and our conversation of (date)I confirm that the following amendments to the notice to furnish information are agreed;

If you have any queries please contact me on…….

Dated at ………. this …. day of ………., ……

(Name)
(Designation of signatory)


Notice "D": Section 17 Follow Up Notice - Non-Compliance

Name and address

Attention:

NOTICE OF IMPENDING COURT ORDER AND PROSECUTION ACTION

Further to the Notice to Furnish Information dated (date) , my records indicate that this request has not been complied with.  Accordingly, I write to inform you that I am considering commencing procedures to obtain a court order for compliance with the request.

I am also considering commencing prosecution action for the following offences, (list the offence(s) and relevant sections).  The penalties for which include; maximum fines of between $…. and $…. and imprisonment for up to 5 years.  (copies of the relevant section(s) attached)

Please advise me immediately why the department should not take this action.

Dated at ………. this …. day of ………., ……

(Name)
(Designation of signatory)  


Letter "E": Information Request to Persons other than the Taxpayer

Name and Address

Attention:  

Notice to Furnish Information

Re: (Full Names [for individuals include all Christian names]/Address [including last known address where possible]/Known Bank Accounts/Telephone Numbers/IRD Numbers/Date of Birth/Date of Incorporation etc.)

I, (name), (designation), (office), being duly authorised by the Commissioner of Inland Revenue pursuant to section 7 of the Tax Administration Act 1994 (the "Act"), require you to furnish the following information relating to the above persons:

The above information, which I consider necessary and relevant, is required in terms of Section 17 of the Act.  I would appreciate the information by (date, allow at least five working days).

If you have any queries, or I can assist with collection of the information, please contact me on (phone/fax numbers).

Dated at ………. this …… day of …….., ……….

(Signature)

(Name)
(Designation of signatory)