PRSI refunds – putting the record straight

There has been a lot of inaccurate reporting and information on so called PRSI refunds due to an error by the Department of Social Protection.

Firstly, what is being talked about is not PRSI refunds but health levy refunds.  That is why refunds can only be claimed up to 2010 as the health levy was replaced by the Universal Social Charge in 2011.

Secondly, it is the inadequacies of the PRSI/Levy system thathas given rise to these refunds, not necessarily an error in calculation or application.  In fact a refund may not arise if the system was operated incorrectly by employers.

Refunds of health levy is nothing new.  The low income exemption was first introduced in 1994 along with a provision for repayment where an overpayment arose.  Those who are entitled to refunds in the years 2008-2010 may be sorry to hear that they may also have been entitled to refunds in years prior to 2008.  Unfortunately, you can only claim a refund for the previous 4 years, so anyone who was entitled to a refunds for earlier years has missed the boat.

I have even heard one commentator state that the overcharging may actually have been planned by Government in order to get extra tax from the taxpayer during a time of austerity.  I don’t know why PRSI and Levies was never operated on a cumulative basis (like PAYE where any overpayment in a year should automatically be corrected in that year).  But this is always how it operated.  To suggest that this was engineered in recent years when the country is in dire need of funds demonstrates a misunderstanding of the fundamentals of our tax system.

This is not some huge error or mistake or conspiracy.  It is quite simply a product of an inadequate and inefficient system of collecting PRSI and Levies.  Thankfully, the USC has moved to a cumulativecollection basis from 2012.  Hopefully, PRSI will follow.  I’ll not hold my breath.

So are you entitled to a refund?

If you earned less than €26,000 in any of the years 2008,2009 or 2010 AND earned more than €500 in any one week in those years then you MAY be due a refund.  If you think you may be due refund you can apply directly to the Department of Social Protection

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