A representative raised concerns with our office that their client was in the process of selling his business and intends to use the funds from the sale of the business to pay his outstanding tax debts. The representative explained that their client had been negotiating for 22 months with the ATO and had offered his residential property and his business as security until  the business sale process completed and he repaid the debt. However, the ATO had not accepted their client’s proposed assets as security for his outstanding tax debts and was looking to refer their client’s business tax debts to the credit reporting bureaus.

The original outcome that the representative had sought was for their client’s case to be reassigned to a new ATO case officer in the interest of ongoing procedural fairness. We explained to the representative that it is unlikely the ATO would agree to reallocate their client’s case to a new ATO case officer if no specific reason for the request can be identified. Instead, the representative and our office agreed that the new outcome we would investigate was to better understand the reasons why the ATO declined to accept their client’s proposed assets as security and the options that may be available to refrain the ATO from referring their client’s business tax debts to the credit reporting bureaus.

During discussions with the ATO, we acknowledged the events that had led the ATO to the disclosure of the business tax debt warning letter. However, we explained to the ATO that the client’s proposed assets as security sufficiently covers the outstanding tax debt and it would be reasonable for the ATO to defer referral of the debt to credit reporting bureaus whilst the client was in the midst of selling their business. The ATO provided the IGTO with its reasons for declining the security offer. We discussed with the ATO the remaining reasons why the ATO did not accept the client’s proposal and identified reasons, including certain missing information, supporting documents that the ATO required and its concerns about the progress in the realisation of assets.

We shared our investigation findings with the representative and encouraged the representative to continue discussions with the ATO. The representative confirmed that they have since provided the ATO with the supporting documents the ATO required to evidence the progress of the sale of the business. As a result, the ATO has agreed to place a hold on referring their client’s business tax debt to credit reporting bureaus and granted a deferral of recovery action whilst further information was to be provided by the representative.