Debt-collecting sheriffs warned the Government that the suspension of tax enforcement during the Covid-19 pandemic threatened their survival and that the closures of their offices would lead to increased tax defaults.
In letters sent to Minister for Justice Helen McEntee, independent sheriffs, who rely on referrals from the Revenue Commissioners and recover unpaid taxes for the State, raised concerns about the viability of their businesses and the knock-on consequences if they were forced to close.
Sheriffs expressed fears with the Department of Justice in letters dating back almost two years that the pandemic-related suspension of tax enforcement from March 2020 threatened the future of their businesses.
They warned this would result in serious damage to the “enforcement infrastructure” that they say has been “the cornerstone of the tax collection system” since the nationwide system of Revenue sheriffs was established by the government in 1986.
New figures published in Revenue’s 2021 annual report this week showed that sheriffs received just 707 referrals from Revenue for the collection of taxes valued at just €17.7 million for the entirety of last year, down from 72,697 in 2019 valued at almost €421 million.
More than €3 billion in Covid-19-related tax debts have been “parked” under a debt warehousing scheme introduced by the Government to help businesses through the pandemic.
The Sheriffs’ Association, which represents the country’s 14 sheriffs, was told by Revenue at a meeting on March 22nd last that normal enforcement would not resume until 2024.
In a letter sent two days later, Dublin city Sheriff Joseph Burke, the association’s chairman, told the Minister that the current stream of work from Revenue that funds the entire sheriff system was “wholly inadequate” to fund the operation of their offices.
Sheriffs had received “little work” since the start of the pandemic and had survived on the Government’s pandemic wage support schemes that ended on April 30th, he said.
“The State now risks losing this important enforcement mechanism as sheriffs offices are facing closure due to their inability to finance themselves,” he told Ms McEntee.
“Should a sheriff’s office close, it would undoubtedly send a negative message to taxpayers and debtors. There would be loss of the deterrent effect of having an operational sheriff’s office and there is a risk of increased tax default as a consequence of closure.”
John O’Malley, Revenue sheriff for Co Mayo, told the Minister in a letter on January 24th last that the “forced closure” of sheriffs’ offices were likely to occur across the State this year.
He said he was sorry to say Revenue had “effectively set aside” part of a contractual agreement under which it recognises that the sheriffs’operation requires a “minimum level of referrals” and will use its best endeavours to ensure “an adequate level of referrals”.
“My office is now operating at a sustained loss and is now uneconomic as a consequence of Revenue’s policy to suspend enforcement. The annual costs associated with running my office is in excess of €110,000 and this is before I draw any salary for myself,” he said.
Mr O’Malley told the Minister that the closure of his office would undoubtedly send a very negative message to taxpayers.
“There would be an increase in moral hazard and there would be the loss of the deterrent effect of having an operational sheriff’s office in the bailiwick,” he said.
“Increased tax default levels would be an inevitable consequence of closure and the optics of an enforcement arm of the State ceasing operations would be highly undesirable.”
This would put Ireland’s reputation “as a destination for foreign direct investment at risk” because of the effect of a likely cessation of private debt enforcement and bank repossessions in the Dublin and Cork bailiwicks currently engaged in by four sheriffs in those areas, he said.
The correspondence was released to The Irish Times by the Department of Justice under the Freedom of Information Act.