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Third parties being targeted to nab tax evaders

Published:Friday | April 22, 2016 | 4:00 AMEdmond Campbell

Tax Administration Jamaica (TAJ) is ramping up its efforts to collect taxes by going after evaders through third parties.

The tax-collection agency is now introducing what it calls a garnishment policy, which allows tax authorities to serve notice on a third party that is the custodian of money belonging to the tax debtor.

TAJ is aiming to collect taxes owed by debtors through third parties, including lawyers, banks and all other financial institutions; lessees and tenants, employers; and third parties involved in trading or contractual relations with the taxpayer.

In a release yesterday, TAJ described garnishment as a process where "notice is served on a person for the purpose of legally seizing money belonging to a debtor".

It explained that garnishment had always existed under Jamaican law but noted that the concept had been incorporated into the Tax Collection Act. Where taxes are owed, the Tax Collection Act allows the commissioner general to issue a Notice of Garnishment and have it served on a third party.

The TAJ said garnishment would only be done when the commissioner general is unable or unlikely to be able to collect from the tax debtor himself.

"Garnishment 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 the payment," the press release said.

According to TAJ, 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.

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 monies belonging or due to the tax debt, for the satisfaction of the tax debtor's debt. A garnishment notice does not require a court order to be effective.

TAJ said it has already served four garnishment notices which have yielded positive results in terms of formalising arrangements for the monthly collection of outstanding sums.