Will garnishment breach confidentiality?
It will be difficult for lawyers to comply with the garnishment policy Tax Administration Jamaica (TAJ) has put into effect without coming into conflict with the fiduciary relationship they have with their clients as well as the confidentiality reposed in them, according to attorney at law Bert Samuels.
At the same time, the Jamaica Bankers Association (JBA), which represents the island's commercial and merchant banks, said it has no issue with TAJ policy in principle.
"The JBA can indicate that Tax Administration Jamaica had conducted education and consultation with the JBA on the garnishment procedures last year, and we have no issues with it in principle," said the association in response to Sunday Business queries.
"Garnishment is not new. The amendment merely simplifies the process by which TAJ is able to achieve it. We, therefore, are not anticipating any adverse consequences from its implementation," said the JBA, which works closely with Government representatives and policymakers to influence regulations and laws that affect the banking industry and keep its members informed about how developments may affect their businesses.
TAJ said on Wednesday that in its efforts to identify and bring tax evaders and avoiders to book, it is now employing garnishment serving a notice on a third party for the purpose of seizing money belonging to a debtor to bolster its enforcement and compliance activities.
The garnishee the person to whom a notice is issued may be any third party who is the holder, controller, or custodian of money belonging to a tax debtor and may include lawyers, banks and other financial institutions, lessees and tenants, third parties involved in trading or contractual relations with the taxpayer, and employers.
While declining to comment in detail without consulting the relevant provisions, Samuels opined that "because lawyers are holding funds for their clients as trustees, and in addition we have lawyer-client confidentiality, which is the privilege of the client, these provisions are going to be difficult for lawyers to comply with without colliding with the fiduciary relationship we have with our clients and the confidentiality which is reposed in us."
Garnishment has always existed under the laws of Jamaica, TAJ said in a release. However, it said that the concept has now been incorporated into the Tax Collection Act, hence, where taxes are owed, Section 40B of the act allows the commissioner general of TAJ to issue a notice of garnishment and have it served on a third party.
Nevertheless, it said garnishment would only be applied when the commissioner general is unable to, or unlikely to be able to collect, from the tax debtor.
It may be pursued where the taxpayer owes taxes and the commissioner general is unable to collect from the tax debtor and is unable to make a satisfactory arrangement for payment.
"The commissioner general must determine or have reasonable cause to believe that a third party holds, controls or has custody of money belonging to the tax debtor, or the third party is liable to make a payment to the tax debtor, or the third party will, within one year, be liable to make a payment to the tax debtor," the release said.
Outstanding money is recovered using a garnishment notice which informs a third party that he/she is required to pay over to the commissioner general money belonging, or due to the tax debtor, for the satisfaction of the debt.
TAJ said a garnishment notice does not require a court order to be effective and that to date, it has serviced four such notice resulting in the formalisation of arrangements for collection of outstanding sums.