IRD has called about your debt: what to do in the first week

The phone rings, the caller says they’re from Inland Revenue, and your stomach drops. Mr has had that call described to him by plenty of good business owners. Here’s the reassuring part: a call from IRD is an invitation to sort things out before it gets harder. This guide is a calm, practical plan for the next seven days.

Why is IRD calling more often?

Inland Revenue has put real effort into collecting overdue tax:

• In October 2025 it said it was calling businesses with debts of $10,000 or more that were between six months and five years old. It reported sending around 16,500 deduction notices from mid-June 2025 — about a quarter more than the year before — with more than 8,000 bank deductions completed by the end of September.
• In January 2026 it announced a focused campaign on overdue GST and employer debt, with a three-step contact approach: direct contact, messages asking for a call back, then a final attempt. Non-responders could face in-person visits, bank deductions and, ultimately, consideration of bankruptcy or liquidation.
• In 2026 it also eased the process for sharing information about significant company tax debt with credit reporting agencies — see can IRD tell credit bureaus about my tax debt?

The message from IRD is consistent: “call us when we call”, use myIR to pay, and set up an instalment arrangement if you can’t pay in full. Ignoring it, in IRD’s words, will only make things worse, because penalties and interest keep growing.

Is it really IRD?

Scammers know businesses fear tax calls. Before you share anything:

• If you’re unsure, end the call and ring IRD back on its published number, or check for messages in myIR.
• IRD’s 2025 pilot with a collection partner noted that the partner would not ask for passwords or bank details, or threaten immediate action.
• Never pay a “tax debt” into an unfamiliar account because of a phone call.

Day 1: Get the facts

• Log in to myIR. Download a statement for each tax type — GST, employer deductions, income tax, provisional tax.
• Note the balance, including penalties and interest, and the oldest overdue period.
• List any unfiled returns. These matter more than anything else right now.
• Read every message in myIR, including any notices.

Day 2: Call your accountant

• Share the statements and the list of unfiled returns.
• Ask for realistic dates to file what’s missing.
• Ask whether any balances look wrong — default assessments on unfiled returns are common and often overstated.
• Agree who will talk to IRD: you, the accountant, or both.

Day 3: Call IRD back

Keep it simple and honest:

1. Confirm who you are and acknowledge the debt.
2. Explain briefly what happened — a lost customer, a slow season, a cost spike.
3. Say what you’re doing: filing missing returns by a date, paying current tax, and arranging a plan.
4. Ask what IRD needs from you — for a business, possibly a twelve-month cash flow forecast (IR591).
5. Write down the name of the person you spoke to, the date and what was agreed.

Mr’s tip: you don’t need to have the whole answer on day three. You need to show you’re engaging and you have a plan to get one.

Day 4: Stop the debt growing

• Pay current GST and employer deductions in full as they fall due. A new debt growing beside the old one undermines everything else.
• Open a separate tax account and move tax into it every time money comes in.
• Check your direct debits and payroll settings so IRD payments go out on time.

Employer deductions deserve special priority: they’re money taken from your staff’s pay, and they attract an ongoing monthly penalty when unpaid. See I’m behind on PAYE and KiwiSaver — what now?

Day 5: Choose your path

There are three main ways to deal with the overdue balance:

Option	Suits	Watch for
Pay in full from cash	Small balances, healthy cash reserves	Don’t drain the account so far that next month’s tax is missed
Instalment arrangement	Moderate balances, cash flow can cover regular payments	Must keep to it; current tax must stay up to date
Finance to clear the debt	Larger balances, growing penalties, a sound business	Full cost of the loan; repayments must fit

You can also combine them — for example, a loan to clear most of the debt and a short arrangement for the rest. Our pages on instalment arrangements and getting a business loan with an IRD debt go deeper.

If finance looks like the right path, start a conversation now rather than waiting — property valuations and legal work take time, and IRD will want to know a plan is moving. There’s no credit check to ask.

Day 6: Build your forecast

Whether IRD asks for one or not, a twelve-month cash flow forecast is the single most useful document you can create this week. It shows:

• whether an arrangement is affordable;
• how much a loan would need to cover;
• when the pinch points are — often January and May.

Our twelve-month cash flow forecast guide walks you through it step by step.

Day 7: Confirm the plan in writing

• Send IRD a message in myIR summarising what you agreed and your next steps.
• If you’ve applied for an arrangement, check it’s been accepted and the first payment is scheduled.
• If you’re arranging finance, tell IRD the expected timing and keep it updated.
• Put a reminder in your diary to check myIR every week until the balance is clear.

What if a notice has already arrived?

The plan’s the same, just faster. A deduction notice means IRD is already taking money from your bank account — call IRD immediately. A Notice of Intent about credit reporting gives you 30 days — use them. Any notice that mentions liquidation or bankruptcy needs your accountant and a lawyer today.

An illustrative example

This case is invented.

A Palmerston North printing business owes about four months of GST and two months of PAYE after a large client went into receivership. IRD calls on a Tuesday. By the following Tuesday, the owner has:

• confirmed the balance in myIR and filed one missing GST return;
• spoken to IRD, explained the client failure, and agreed to send a plan within two weeks;
• paid the current month’s PAYE in full;
• built a forecast showing the business is profitable again but can’t clear the backlog from cash;
• started a property-secured loan application against a rental, with the IRD balance to be paid directly at settlement.

Two weeks later, IRD has the plan, the loan is with the valuer, and the owner is sleeping again.

What to say (and not say) on the call

Mr’s script for the first conversation with IRD is short:

• Do say: “I know about the debt, I want to sort it, and here’s what I’m doing this week.”
• Do say: “My accountant is [name] and will be filing [returns] by [date].”
• Do ask: “What do you need from me, and by when?”
• Do ask: “Can you note on my file that I’m arranging a plan?”
• Don’t promise a lump-sum payment you can’t make. A broken promise is worse than a realistic plan.
• Don’t argue about penalties on the first call. Get the facts first; your accountant can raise remission later if there are grounds.
• Don’t disappear after the call. Follow up in writing in myIR so there’s a record.

If English isn’t your first language or you’d prefer someone with you, ask your accountant or a trusted adviser to join. IRD deals with this every day; a calm, honest call is what they want too.

Talk to Mr before the next call

If IRD has been in touch, the best time to explore your options is now. Tell us what’s owed, what kind of tax it is, whether returns are filed and whether any notices have arrived. There’s no credit check to ask, nobody else sees your enquiry, and a real person will help you work out the most sensible path.

Please give us the exact myIR balance and any notice dates on the form — timing matters with IRD, and accurate details help us move at the right speed. Ask about clearing your IRD debt.