The Inland Revenue Department (IRD) has accepted all recommendations from the Office of The Ombudsman regarding the submission of electronic tax returns by members of the public, waiving relevant penalties and launching new safeguards.

The Ombudsman today released a direct investigation report on the unsuccessful delivery of electronic tax returns submitted by members of the public for the 2024-25 year of assessment.

In a statement responding to the report, the IRD said it is highly concerned that some taxpayers, after completing digital signing via "iAM Smart" while filing their tax returns through eTAX last year, did not return from "iAM Smart" to eTAX to complete the entire tax return filing process, resulting in the tax returns not being submitted to the department.

The department highlighted that it has actively followed up on the implementation of the Ombudsman’s recommendations, with the majority of them having already commenced or been completed.

After receiving reports from taxpayers last year, the IRD actively initiated follow-up actions and enhanced the system and workflow, and has been fully co-operating with the Ombudsman during its direct investigation.

The new enhancement measures were put in place before the issuance of the individual tax returns for the 2025-26 year of assessment in May this year. The IRD has not received similar complaints from taxpayers since then.

The enhancements included adding a pop-up message to eTAX to remind users that they must return to the eTAX system to complete the tax return filing process after completing digital signing via "iAM Smart". Users who have successfully submitted their tax returns will receive confirmation messages in their eTAX message boxes.

The department also modified the message displayed on the relevant confirmation page, as well as the "iAM Smart" electronic notifications and emails sent to users following the completion of digital signing via "iAM Smart", to remind taxpayers to return to the eTAX system to complete the tax return filing process.

Furthermore, information entered by users in eTAX will be temporarily saved automatically, saving users the trouble of repeating the relevant process when they fail to sign or submit their tax returns for various reasons.

The IRD added that, according to records, between May last year and January, about 490,000 people used "iAM Smart" to sign their individual tax returns via eTAX. Over 90% of them successfully submitted their tax returns upon the first attempt.

As for the roughly 33,000 taxpayers who failed to submit their tax returns upon their first attempt, approximately 80% of them had reused "iAM Smart" to sign and submit their tax returns successfully before the IRD issued penalty notices and/or notices of estimated assessment.

Among the 33,000 taxpayers, nearly 14,000 taxpayers used "iAM Smart" again to sign and successfully submit their tax returns on the very same day they made their initial attempt.

The IRD apologised for the inconvenience caused to taxpayers by this incident and is actively following up on the relevant cases.

It emphasised that no taxpayers will be penalised due to the incident. Penalty remissions will be granted and penalty payments will be refunded to taxpayers who filed their tax returns after the submission deadline as a result of the incident. The IRD has notified the relevant taxpayers via eTAX regarding the arrangements for the refund of penalties.

The two prosecutions related to the incident have also been withdrawn.

For cases where taxpayers received notices of estimated assessment but did not request a revision, the IRD will issue letters to the relevant taxpayers before mid-September to remind them that if they consider that the assessments failed to take into account the information provided in their tax returns, they may apply for a revision of assessments.