NZ Herald [NZPA], 25 March 1999

WELLINGTON - Thousands of beneficiaries who may have been overpaid in error in the 1997-1998 financial year are being penalised for not repaying the extra money.

One Wellington beneficiary, asked to return an extra family-support payment of $153, says it is "bureaucracy gone mad" and has refused to pay what she owes and the penalty payments.

She said neither Inland Revenue nor Work and Income NZ (Winz) warned her about the extra payment nor explained why she was billed.

The Evening Post reported yesterday that the only people being asked to return the money were those who filed tax papers - which disclosed the overpayment.

The beneficiaries normally get family support every second Tuesday, 26 times a year, but because of a calendar quirk the 1997-1998 financial year had 27 payment days.

The first payment was on April 1, 1997 - the first day of the financial year. The 27th payment fell on March 31,1998 the last day of the financial year.

Inland Revenue, which looks after family support payments, said it warned Winz - then known as Income Support - early last year about the extra payment day.

It asked Winz to adjust the payments so the total amount each beneficiary got for the year would not be more than under the 26 payments regime.

A spokeswoman for Work and Income, Helen Cowie, said Winz did not adjust payments because the task was too complex for its computer system.

Ginny Legge, of Inland Revenue, said that nevertheless, the beneficiaries billed had to pay back the extra payment along with penalties and interest.

Helen Cowie said Winz would not cover the extra payment, penalties and interest.

A Johnsonville beneficiary, Vicki McSeveney, said she and five other beneficiaries she knew would not pay.

"It's their [the departments'] stuff- up," she said. "It's bureaucracy gone mad. It's just crazy."

Vicki McSeveney, who supports two children on the domestic purposes benefit, said she could not afford to return the money. She missed the repayment deadline because she did not have enough money left from Christmas and had back4o-school costs.

Inland Revenue billed her last September for $153, and gave her until February 7 to pay. The bill was now $161.85 from penalties and interest and would increase each month by 2 per cent.

Her income was under $20,000 a year and she had to return the extra payment only because she had filed a tax return.

Ginny Legge said beneficiaries receiving family support with an income under $20,000 did not have to file a return. But if they did file, they were liable for any tax owed.

Vicki McSeveney said she was prepared to pay back $153 but only by instalments she could afford.

Inland Revenue said it would consider taxpayers' financial circumstances if they could not afford the bill in one go.