---
title: "Helping Taxpayers Avoid Debt: Inland Revenue’s Pilot Program"
description: Inland Revenue’s pilot with Baycorp helps 3,000 New Zealand taxpayers manage small tax debts, preventing financial hardship and avoiding penalties through early intervention.
---

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# [Helping Taxpayers Avoid Debt: Inland Revenue’s Pilot Program](https://legalwiseseminars.co.nz/insights/helping-taxpayers-avoid-debt-inland-revenues-pilot-program)

 Written by [Meg Murthi](https://legalwiseseminars.co.nz/insights/author/meg-murthi) | Apr 28, 2025 1:55:09 AM

 

Earlier this year, Meg presented at our[ Challenging Wills, Difficult Estate Planning and Tax Treatment in Estate Administration seminar.](https://legalwiseseminars.co.nz/seminar-details?event=13749584266) You can purchase the post-seminar recording [here.](https://legalwiseseminars.co.nz/seminar-details?event=13749584266)

**Helping Taxpayers Avoid Debt: Inland Revenue’s Pilot Program**

New Zealand’s **Inland Revenue (IR)** has launched a **[five-month pilot](https://aus01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.ird.govt.nz%2Fmedia-releases%2F2025%2Fpilot-for-new-tax-debt-service&data=05%7C02%7Ceditor%40legalwiseseminars.com.au%7C16afe040cdaf43839e4808dd81e52bbe%7C4193e410cc45456cbc35a9f288465bdb%7C0%7C0%7C638809543816712681%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&sdata=3ueIC1eIz9uYFf2TWp5HDY4c5IxMP4sKTM7kHJp5c3E%3D&reserved=0)** to assist taxpayers in managing small outstanding tax debts before they escalate. The initiative partners with **Baycorp**, a third-party provider, to reach out to **around 3,000 taxpayers** with debts of **less than $5,000**. The goal is to prevent penalties and interest from accumulating, offering **early intervention** to avoid financial hardship.

**How the Pilot Works**

Baycorp will **contact selected taxpayers** via **email, SMS, and phone calls** to:

- Confirm the details of the outstanding tax debt.
- Direct taxpayers to **IR’s self-service debt resolution options**.
- Refer taxpayers back to IR if their case requires additional support.

Importantly, Baycorp **will not demand payment**, request banking details, or threaten legal action. Inland Revenue has set strict guidelines to ensure privacy and security, limiting Baycorp’s access to only **essential taxpayer data** needed to assist with resolving debts.

**Preventing Financial Hardship**

One of the **key benefits** of this pilot is **helping taxpayers before their debt becomes unmanageable**. Tax debt, if left unpaid, can accumulate interest and penalties, making it harder to resolve over time. This initiative provides **early support**, ensuring taxpayers understand their obligations **before financial strain worsens**.

**How This Program Supports Taxpayers**

1. **Early Intervention to Prevent Escalation** By proactively contacting those with small debts, the pilot helps taxpayers address issues **before enforcement measures**—like wage garnishment or asset seizure—become necessary. This ensures they **avoid unnecessary penalties** that could worsen financial difficulties.
2. **Guidance on Repayment Plans** Although Baycorp cannot negotiate tax relief, it **directs taxpayers to Inland Revenue’s options**, including **installment plans**, which allow gradual repayment instead of demanding a large lump sum.
3. **No Negative Credit Reporting** Unlike traditional debt collectors, Baycorp **cannot use taxpayer data for credit rating purposes**. This means taxpayers won’t face long-term consequences for resolving their debt through this pilot.
4. **Reducing Stress Through Supportive Engagement** Financial difficulties often lead to avoidance, making debt harder to manage. By offering **clear guidance in a non-threatening way**, this pilot encourages taxpayers to **engage early**, preventing the emotional strain of unresolved debt.
5. **A More Efficient and Fair Tax System** Ensuring that small tax debts are resolved without aggressive collection tactics creates a **fairer, more supportive system**, where taxpayers are encouraged to meet their obligations **without fear of hardship**.

**Looking Ahead**

The pilot will run for **five months**, after which IR will assess its success. If the approach proves effective, it may be expanded to help **more taxpayers** manage their debts in a **constructive and ****proactive** manner.

By providing **early guidance, privacy protections, and repayment flexibility**, this initiative reflects a shift toward a **more supportive, less punitive** tax collection process.

*Disclaimer: The statements, analyses, opinions and conclusions in Legalwise Insights are those of the respective authors and not of Legalwise Seminars Pty Ltd which acts only in the capacity as editorial co- ordinator of the content in Legalwise Insights. No part of any article can be regarded as legal or financial advice. Although all care has been taken in the preparation of all articles, readers must not alter their position or refrain from doing so in reliance on any information contained therein. Neither the respective authors nor Legalwise Seminars Pty Ltd accept or undertake any duty of care relating to any part of Legalwise Insights**Liability limited by a scheme approved under the Professional Standards Legislation*

| Meg Murthi, Associate Director, CA & LLB  Meg has considerable experience in tax. She has worked for Deloitte and Ernst & Young in New York City and New Zealand. She has advised an array of clients on their cross-border transactions, business divestments and expansions (including mergers and acquisitions). She has also conducted tax reviews to mitigate inefficient tax costs and identify potential contingent tax liabilities for financial reporting. Meg has extensive knowledge in audit defence and tax controversy. She has worked as an Investigator at Inland Revenue and has unique insight on how best to advocate for her clients interests to ensure pragmatic settlement outcomes on contentious matters. Meg has also managed tax automation projects involving the implementation of electronic invoicing and tax engine systems. She has prepared business cases; helped select vendors; documented business requirements; completed transaction mapping; and provided tax technical feedback to ensure successful implementation of the automated system. |   |   |   |
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