We thank Mr Lim Tong Wah for his feedback and the opportunity to clarify whether banks can step in to recover tax arrears owed by their customers (‘Do Banks have absolute authority over customers' funds?', 3 July 2014).

The vast majority of taxpayers in Singapore fulfill their social obligations by paying their taxes, thereby enabling the government to provide public goods and services for citizens’ benefit. A small proportion of taxpayers fail to do so, and refuse to work out alternative arrangements such as instalment plans. To be fair to all taxpayers and to maintain the very high tax compliance rate in Singapore, IRAS needs to recover the outstanding tax payments from such taxpayers.

Under the law, IRAS is empowered to appoint banks to transfer to the authority the amount of tax owed, drawn from funds held for or on behalf of the errant taxpayer. This form of recovery of overdue taxes is a common practice adopted by tax authorities around the world, including those in Hong Kong, Australia, and the US. Any bank in Singapore can be authorised to do so. The CPF Board can also be appointed to recover the amount of tax owed by the individual from any monies that is payable to him when he applies to withdraw his CPF savings.

We therefore encourage taxpayers to pay their taxes on time, including via GIRO to enjoy up to 12 months of interest-free instalment payments, and avoid missing due dates. Taxpayers can also sign up for SMS alerts at myTax.iras.gov.sg, to be alerted when their income tax bills are issued. We also advise those who face financial difficulties to contact IRAS to discuss alternative payment arrangements.