Get Help With Overdue Tax Returns: Filing & Penalty Relief

There’s nothing quite like the anxiety of knowing your tax returns are overdue—the worry about penalties, the uncertainty about how much is owed, and the pressure of IRD letters piling up. But you’re not alone, and more importantly, there are practical ways forward. Whether you’re an individual or a business owner in New Zealand, it’s possible to get back on track, take control of your tax obligations, and reduce the financial and emotional toll of tax debt.

This guide is designed to walk you through every step, from identifying exactly which returns are outstanding and gathering the right documents, through to filing, managing payments, seeking penalty relief, and applying for hardship support if things have become overwhelming. Along the way, you’ll discover when it makes sense to reach out for professional help, and how small changes can help you avoid overdue returns in the future. Taking action now doesn’t just minimise penalties—it gives you the chance to regain peace of mind and restore your financial footing.

Step 1: Assess the scope of your overdue tax returns

Before you can tackle your tax debt, you need a clear picture of exactly which returns are outstanding. An accurate inventory of overdue periods and return types not only helps you prioritise filing but can also prevent the IRD from issuing costly default assessments based on their own estimates. Spend some time mapping out what’s missing—this first step lays the groundwork for everything that follows.

Identify which returns are overdue

Start by logging into your MyIR account. Under the “Returns” or “Returns due” section you’ll see a list of all outstanding filings. Make note of:

• IR3 – Individual income tax returns

• IR4 – Company income tax returns

• GST 101/103 – Goods and Services Tax returns (monthly, two-monthly or six-monthly)

• IR348 – Employment information (PAYE)

• Any other specialised forms (e.g. Resident Withholding Tax, RLWT)

Once you’ve pulled the list, record the details in a simple spreadsheet or table. Include columns for:

• Return type

• Tax period (e.g. 1 April 2023 – 31 March 2024)

• Original due date

• Current status (unfiled, filed but unpaid, default assessment received)

This visual tracker will keep you focused, help you avoid accidentally skipping a period, and provides a handy reference if you’re asked by a tax agent or the IRD.

Understand the implications of default assessments, penalties, and interest

If you don’t file by the due date or don’t contact the IRD, they’ll issue a default assessment. This means they estimate your tax and send you an assessed liability—which can be higher or simply different from what you owe. On top of that, penalties and use-of-money interest begin to stack up immediately.

• Default assessment: IRD applies their own figures (often based on previous years’ returns) and issues a notice of debt.

• Late-filing penalties:

  • 1% of unpaid tax the day after the due date

  • 4% of the outstanding amount seven days later

  • 1% of the remaining unpaid balance each subsequent month (up to 12 months)

• Use-of-money interest (UOMI): charged daily on any unpaid tax and penalties. The calculation is:

  Interest = Principal × Rate × Days ÷ 365

Example You owe $10,000 core tax for a GST return due on 7 May. You file nothing and pay nothing until 7 July (two months late). Your charges look like this:

• Late-filing penalties

  • 1% the day after due date: 0.01 × $10,000 = $100

  • 4% on day 7: 0.04 × $10,000 = $400

  • 1% per month for two months: 2 × (0.01 × $10,000) = $200 Total penalties = $700

• Use-of-money interest (assume 8% p.a.):

  10000 × 0.08 × 61 ÷ 365 ≈ $133.70

By the time you lodge, your $10,000 tax bill has grown to about $10,834—so knowing these figures upfront will help you plan your next moves and decide whether to seek relief on penalties or structure an instalment plan.

Step 2: Compile your financial information

Before you lodge those overdue returns, you’ll need a clear, organised set of documents. The more accurate and detailed your financial information, the less chance the IRD will come back with queries or reassessments. Think of this phase as gathering all the puzzle pieces—once you’ve got everything in place, it’s much simpler to complete your returns confidently and correctly.

Gather income records and transaction data

First up, assemble all sources of income and related transactions for each period you’re filing:

• Bank statements – both business and personal accounts, covering all relevant dates. • Salary and wage slips – including any PAYE summaries or group certificates. • Invoices and receipts – sales invoices, supplier bills, expense claims. • Dividends, interest and investment income – statements from banks, share registries or managed funds. • Rental income – tenancy agreements and rent ledgers, plus any expenses such as rates.

To keep track, decide whether you’ll use digital folders or a physical file system. For digital organising, name folders by tax year and subfolders by income type (e.g. “2023–24 > Rental Income”). If you prefer paper records, use clearly labelled files or an A4 binder with dividers. Consistent labelling saves time later on and helps if you share these documents with a tax adviser.

Retrieve previous tax filings and IRD correspondence

Next, log into MyIR and download any historical returns or official notices the IRD has sent you. This includes:

• Completed IR3, IR4, GST 101/103 forms for prior years. • Default assessment letters and penalty notices. • Any correspondence about use-of-money interest or instalment arrangements.

Having the originals on hand serves two purposes: it lets you reconcile your figures—spotting discrepancies between your records and the IRD’s numbers—and it provides evidence if you decide to apply for penalty relief or hardship. If something doesn’t match, you’ll know exactly where to look: perhaps a missing invoice or an overlooked bank transaction.

With all your financial information at your fingertips, you’re ready to move on to estimating your outstanding tax liability. This solid foundation reduces surprises and puts you in the strongest position as you work through the next steps.

Step 3: Calculate your outstanding tax liability

Now that you’ve gathered your documents, the next move is to work out exactly how much you owe. Knowing your total liability—core tax, penalties and interest—lets you plan for payment, instalment arrangements or relief applications with clarity. If you skip this step, you risk underestimating your debt and facing surprises when the IRD follows up.

Estimate core tax owed for each period

Begin with the basic tax you owe for each overdue return:

1. Refer to your last filed return for a baseline. For example, if your IR3 for 2022–23 showed a $7,000 liability, that’s a good starting point for 2023–24 if your income hasn’t changed dramatically.

2. If income or deductions have shifted, adjust accordingly. Say your turnover rose by 10%, multiply last year’s tax by 1.10 to estimate this year’s core tax.

3. If records are patchy, use default assessments the IRD has already issued—just be careful to spot any penalties that might be included there.

Example: You filed an IR4 in 2022 and owed $12,000. In the missing 2023 return year your taxable profits grew by about 20%, so you estimate:

Estimated tax = $12,000 × 1.20 = $14,400

Record each period’s core tax in your tracker alongside the corresponding return.

Compute penalties and use-of-money interest

On top of core tax, you must allow for late-filing penalties and UOMI (use-of-money interest). Here’s how to break them down:

• Late-filing penalties are applied in stages:

• 1% of the unpaid tax the day after the due date

• 4% of the original tax seven days later

• 1% per month thereafter (up to 12 months)

• Use-of-money interest is charged daily on the unpaid balance (tax plus penalties). The formula is:

Interest = Principal × Rate × Days ÷ 365

Where “Rate” is the annual IRD UOMI rate (check MyIR or IRD website for the current percentage).

Example calculation for a $14,400 GST debt two months overdue (using an 8% p.a. UOMI rate):

• Penalties:

  • Day after due date: 0.01 × $14,400 = $144

  • Day 7: 0.04 × $14,400 = $576

  • Two months of 1%: 2 × (0.01 × $14,400) = $288 Total penalties = $1,008

• UOMI (@ 8% for 61 days):

  14400 × 0.08 × 61 ÷ 365 ≈ $192.66

Add these to your core tax to get the full liability:

Total owing ≈ $14,400 + $1,008 + $192.66 = $15,600.66

By running these numbers for each overdue period, you’ll end up with a clear picture of your full tax debt. This figure becomes the foundation for deciding whether to pay in one lump sum, apply for an instalment arrangement or seek penalty relief.

Step 4: File your overdue tax returns

Filing late returns might feel daunting, but a structured approach makes it straightforward. Whether you choose the quick online route or prefer paper forms—or even hand the task to a tax agent—this step ensures your returns land with the IRD correctly and with minimal fuss.

Deciding which method to use comes down to your comfort with digital tools, the complexity of your affairs and how quickly you need confirmation from the IRD. Below are the two main routes to consider.

Filing online through MyIR

The fastest way to get your overdue returns to the IRD is via your MyIR account. Online filing provides instant confirmation and usually avoids extra non-electronic-filing penalties.

1. Sign in at MyIR (https://myir.ird.govt.nz/) and navigate to “File a return”.

2. Choose the return type (IR3, IR4, GST 101/103, etc.) and select the tax period you’re catching up on.

3. Complete each section—income, deductions, credits and any previous instalments—using your organised records.

4. Review the summary screen carefully, then click “Submit” to lodge.

5. You’ll see an on-screen timestamp and receive an email receipt as proof of lodgement.

Key benefits of online filing:

• Precise timestamping removes any doubt about when your return arrived.

• Automated checks flag missing or inconsistent data before submission.

• Faster processing with direct integration into IRD systems.

Filing via paper returns or through a tax agent

If you’re uneasy with online systems or your returns need detailed adjustments, paper filing or professional help might be the better choice.

To file on paper:

• Download the correct form (IR3, IR4 or GST 101) from the IRD website.

• Fill in each field clearly—block letters work best—and attach supporting documents (income summaries, bank statements).

• Make copies for your records, then mail the originals to the IRD address shown on the form.

Using a tax agent can streamline the process. Agents handle form preparation, ensure compliance with IRD guidelines and liaise with IRD staff on your behalf. Engage a specialist if:

• You have multiple years or tax types outstanding.

• Your financial situation includes trusts, rental properties or overseas income.

• You’d rather dedicate your time to running your business or day-to-day life.

Whether you file online, by post or via a professional, the key is prompt, accurate lodgement. Once your returns are with the IRD, you can shift focus to settling the debt through payment or instalment arrangements.

Step 5: Pay your tax debt or structure payments

After your returns are filed, it’s time to tackle the balance you owe. You have two main choices: pay the full amount straight away or set up a structured payment plan. Paying in full eliminates any further interest or penalties, but if cash flow is tight an instalment arrangement can offer breathing space without sacrificing compliance.

Payment methods accepted by IRD

The IRD accepts payments through several convenient channels:

• Online banking: use bill payments with your IRD client number.

• Credit or debit card: processed via the IRD payment portal.

• Direct debit: arrange automatic deductions from your bank account.

• Cheque: post to the IRD address with a completed payment slip.

Before you proceed, double-check you have:

• Your IRD client number (eight or nine digits).

• The payment reference (from your assessment or return).

• The correct tax type code (for example “GST 101” or “IR4”).

• The relevant tax period or assessment date.

Online banking and direct debit tend to be the fastest and most reliable methods. If you opt for a cheque, allow extra time for mail to avoid unexpected interest charges.

Applying for an instalment arrangement

Spreading your debt over regular payments can ease immediate financial pressure while keeping you on track with the IRD. Here’s how to apply:

1. Sign into MyIR and select “Apply for an instalment arrangement”.

2. Outline a repayment schedule—choose instalment amounts and frequency (weekly, fortnightly or monthly).

3. Provide a summary of your financial position, including income, expenses and assets.

4. Submit your proposal and await IRD confirmation.

Stick to the approved schedule. Missing payments may incur new penalties and risk the arrangement being cancelled.

Example scenario: A sole trader has a $10,000 liability from overdue GST returns. They propose a 12-month plan, resulting in monthly repayments of:

$10,000 ÷ 12 = $833.33

This approach eases cash flow and halts further penalty accrual, ultimately reducing the total extra cost.

Choosing the right payment path—lump sum or instalments—depends on your cash flow. Whatever you decide, timely payments are crucial for avoiding fresh interest and restoring your standing with the IRD.

Step 6: Seek penalty relief from Inland Revenue

If penalties have ballooned beyond what you can comfortably cover, the IRD does offer a pathway to have part or all of those late-filing and late-payment charges waived. Successful relief applications can significantly reduce your overall debt, but you need to show that the penalties arose from circumstances outside your control. Below we explain who might qualify and how to make a formal request.

Eligibility criteria for penalty waiver

Not every late return or delayed payment automatically qualifies for relief. The IRD will generally consider waiving penalties if you can demonstrate that something unforeseeable prevented you from meeting your obligations. Common examples include:

• Serious illness or hospitalisation, affecting you or an immediate family member

• Natural disasters (floods, earthquakes) that disrupt record-keeping or business operations

• Fire or theft that destroyed documentation

• Errors on the IRD’s part, such as incorrect advice or system outages

Simply running low on cash usually isn’t enough. Financial hardship alone is not a stand-alone ground for penalty relief, although it can strengthen an application if combined with one of the events above. In practice, if you faced a qualifying event and still fell behind, you’re in a much stronger position when the IRD considers your request.

How to apply for a penalty waiver

Putting together a robust waiver application involves two main steps: preparing a clear request and supplying evidence to back it up.

1. Prepare your request • Address it to the IRD’s Customer Services team. • Outline which penalties you want waived and for which tax periods. • Explain concisely what happened, when it happened and how it prevented you from filing or paying on time.

2. Gather supporting documentation • Medical certificates or hospital discharge summaries for health-related events. • Insurance reports or police summaries for theft or fire. • Photos, news reports or council statements for natural disaster claims. • Copies of any IRD system-outage notices or correspondence if you experienced technical issues.

Once you’ve assembled your letter and evidence, you can submit your request via your MyIR account—look for the “Waive payment penalties” option—or post it to your local IRD office. The IRD aims to respond within 20 working days, though complex cases may take longer. Keep a copy of everything you send, and follow up if you haven’t heard back after a month.

For detailed guidance on the process and the latest forms, see the IRD’s official page on waiving payment penalties.

Step 7: Apply for financial hardship support

If after filing and arranging payments you still can’t meet your tax obligations, an IRD financial hardship application could ease the burden. Unlike penalty relief—which focuses on waiving late-filing or late-payment charges—hardship support is designed for those genuinely unable to pay without compromising basic living or essential business expenses. While core tax write-offs are rare, penalties (and occasionally some interest) may be remitted, giving you a fresh start.

Understanding IRD financial hardship applications

Under IRD rules, financial hardship means you cannot pay your tax by the due date without suffering serious financial distress—such as not being able to afford utilities, rent or essential supplies. If the IRD accepts your application, they can:

• Write off or remit penalties associated with late filing or late payment

• In some cases remit use-of-money interest on overdue amounts

• Suspend recovery action while your application is considered

Remember that full tax write-offs are extremely uncommon; the focus is on alleviating extra charges so you can get back on an even footing.

Preparing and submitting a hardship application

A well-structured application improves your chance of success. Follow these steps:

1. Draft a clear statement of circumstances • Describe the nature of your financial hardship and how it has affected your ability to pay (e.g. sudden loss of income, medical emergency, business downturn). • Specify which tax periods and liabilities you’re seeking relief for.

2. Gather supporting evidence • For personal hardship: medical certificates, insurance or accident reports. • For business hardship: a 12-month cashflow forecast (form IR591) that shows projected income and expenses. You can send a Twelve-month cash flow forecast – IR591 from your MyIR account.

3. Complete any relevant IRD forms • IR1009 fact sheet: guidance on significant drops in income and eligibility criteria. Download the IR1009 fact sheet. • Any additional declaration forms the IRD requests for your situation.

4. Lodge your application • In MyIR, click “I want to…”, then “Register, application and enrolment” and choose “Application for relief”. • Attach your statement, evidence and forecasts, then submit. • Alternatively, post your package to your nearest IRD office—make sure you keep copies of everything.

The IRD aims to respond within 20 working days. If approved, you’ll receive a formal notice of remission for penalties (and any interest). If your application is declined or you have questions, you can discuss next steps with the IRD or seek advice from a specialist.

By taking the time to apply for hardship support, you may significantly reduce the extra costs attached to your overdue tax—helping you regain control of your finances and achieve financial independence without facing undue stress.

Step 8: Consider professional tax debt assistance

If you’ve worked through the previous steps but still feel daunted by the scope of your overdue returns, bringing in a specialist can make a big difference. Tax debt practitioners combine technical know-how with negotiation experience—and often provide the emotional support you need to face financial challenges head-on. Engaging professionals can streamline the process, give you confidence that everything is handled correctly and free you up to focus on running your business or simply getting back to normal life.

Benefits of working with a specialist

Partnering with a tax debt expert offers several advantages:

• Technical compliance assurance: They stay up to date with IRD rules, so your returns are accurate, complete and lodged in the correct format.

• Skilled negotiation: Specialists know how to present your case, whether it’s securing an instalment arrangement, penalty waiver or hardship approval.

• Time savings: Preparing multi-year returns or reconciling complex GST and PAYE liabilities can be labour-intensive—outsourcing frees you to concentrate on your day-to-day priorities.

• Psychological support: Money stress can be overwhelming. A coach trained in financial therapy helps you manage anxiety, rebuild confidence and develop healthier financial habits.

• Targeted expertise for complex cases: If you’re dealing with large GST debts, cross-period reconciliations, multiple default assessments or trust structures, a specialist is best placed to navigate those complications smoothly.

How Tax Debt Coach can support your overdue returns process

At Tax Debt Coach, we combine Chartered Accountant credentials with professional financial therapy training. Our services include:

• Preparing and lodging overdue tax returns (IR3, IR4, GST, PAYE information) with precision and speed.

• Crafting compelling financial hardship and penalty-waiver applications, backed by detailed cash-flow forecasts and supporting evidence.

• Negotiating tailored instalment arrangements with the IRD to spread payments in a way that suits your cash flow.

• Conducting psychological assessments of your money behaviours to address root causes of tax arrears and build lasting financial resilience.

By working with us, you gain a dedicated partner who not only resolves your immediate obligations but also guides you toward stronger money management habits. To learn more about how we can take the stress out of catching up on overdue returns, visit our Tax Debt Coach services page.

Step 9: Improve your cash flow and prevent future tax issues

Recovering from overdue returns is one thing; staying ahead of your next filing cycle is another. By putting in place simple cash-flow and budgeting systems, you’ll minimise the risk of falling behind again and reduce money-related stress. Two key areas to focus on are managing your day-to-day budget and building financial habits that endure.

Budgeting and debt management with MoneyTalks

Staying on top of living expenses, business costs and tax provisions can feel overwhelming—especially when you’re still juggling overdue debt. MoneyTalks is a free, confidential helpline funded by the Ministry of Social Development. Their trained coaches can:

• Help you design a practical budget that balances everyday costs, business outgoings and IRD instalments • Review any existing debts and advise on repayment priorities, consolidating high-interest loans where possible • Provide strategies for negotiating with creditors and setting up sustainable payment plans

You can call MoneyTalks on 0800 345 123 (Monday to Friday, 9 am–5 pm) or use their secure web chat. Having an expert guide you through budgeting and debt management will free up cash flow and give you peace of mind.

Building lasting financial capability

A robust budget is only the first step. To keep your finances on track throughout the year:

• Schedule monthly cash-flow reviews: set a recurring reminder in your digital calendar to compare actual income and expenses against your budget. • Automate savings for tax: open a dedicated “tax” account and arrange a small transfer—say 15 percent of each invoice payment—so you build a buffer ahead of due dates. • Use simple tracking tools: whether you prefer a spreadsheet template or cloud accounting software like Xero or MYOB, pick a system you’ll update regularly. • Explore budgeting apps: solutions such as Sorted or PocketSmith link to your bank feeds, categorise spending and send alerts before your next IRD deadline.

By embedding these practices, you’ll avoid surprise shortfalls and cultivate confidence in managing money. The result? A clearer view of your financial picture, fewer sleepless nights and a much smoother path to compliance when it’s time to file your next return.

Step 10: Maintain compliance and monitor your tax obligations

Once you’ve caught up on overdue returns and sorted your payments, the key to staying stress-free is vigilance. Small habits—like setting reminders and periodically checking your IRD records—will help you spot potential issues before they snowball. Think of this as an ongoing maintenance routine: it takes just a few minutes each month but delivers major peace of mind.

By building simple processes now, you’ll avoid the scramble of last-minute lodgements or unexpected penalties. Over time, these routines become second nature, freeing you from the anxiety of wondering what’s due and when. Here’s how to keep on top of your tax calendar and make sure nothing slips through the cracks.

Setting reminders for upcoming return due dates

A well-timed nudge can be the difference between on-time lodgement and a late-filing penalty. Use your smartphone or calendar app to schedule alerts at key intervals:

• Six weeks before: remind yourself to gather records and start preparing the return. • Two weeks before: check for missing information or enquiries from a tax agent. • One day before: final prompt to submit online or drop off paperwork.

For example, create a template invite titled “File IR3: Individual tax return” and set it to recur annually on 1 June, with notifications at the intervals above. Do the same for your GST cycle—maybe on the first of every two-month period if you’re on a bi-monthly filing schedule. Over time, these automated alerts will ensure you’re always one step ahead.

You might also explore specialised apps designed for small business and sole traders. Many allow you to track multiple due dates (PAYE, GST, terminal tax), categorise filings by type and even link directly to your MyIR portal. Pick a tool that syncs with your workflow and you’ll never miss another tax deadline.

Regular review of MyIR statements and tax health

Even with reminders in place, it’s wise to perform a quick monthly health check of your tax records. Log into MyIR and look for:

• Any unfiled returns or notices issued by the IRD. • Outstanding use-of-money interest or penalties you may have overlooked. • Changes to your client number, filing frequency or contact details.

Spend ten minutes each month scanning the dashboard—if something’s amiss, you’ll spot it early and can address it before it becomes a larger problem. If minor issues arise—say, a small discrepancy in your GST return—deal with them straight away rather than letting them compound.

Finally, don’t hesitate to reach out for help at the first sign of trouble. Whether it’s a quick call to a tax agent or a brief session with a financial coach, timely advice can keep a small hiccup from becoming a full-blown tax headache. Regular monitoring coupled with prompt action is the simplest strategy to maintain compliance and protect your financial wellbeing.

Final thoughts and next steps

Catching up on overdue tax returns can feel overwhelming, but every step you take now will translate into real savings—both in penalty relief and in peace of mind. By following this guide to assess your outstanding returns, gather accurate records, file late lodgements correctly, and structure payments or hardship applications, you’re actively reducing the compounding costs of interest and penalties. What might seem like a mountain at first will become manageable when broken down into clear, sequential actions.

Remember, the sooner you address overdue filings, the more options you’ll have. Promptly applying for instalment arrangements or penalty waivers can stop additional charges from rolling on and give you breathing space to get back on track. Likewise, setting up simple reminders and budgeting routines will make sure future returns slip right into place, preventing a repeat cycle of anxious delays.

If you ever feel you need extra support—whether it’s hands-on tax preparation, negotiating with the IRD or working through the underlying financial habits that led to arrears—you don’t have to go it alone. At Tax Debt Coach, we combine Chartered Accountant expertise with financial therapy techniques to guide you through each step of the process. Visit our homepage to explore our full range of services and book a free initial consultation. Let’s turn your tax worries into a clear path forward.