THE Tax Administration yesterday said that it is preparing 'Failure to File' notices to be mailed to more than 50,000 tax delinquents who will be given 14 days to respond or face prosecution.

"This measure is being taken by the tax authority to send a strong message to delinquent taxpayers that they have an obligation to file and pay their taxes on time," the Tax Administration said in a news release.

According to the tax authority, it had identified 11,242 organisations and 44,786 self-employed individuals who failed to file their income tax returns by the March 15 due date. As such, the agency has embarked on an aggressive compliance drive targeting the non-filers.

"The tough stance is being adopted following an intensive two-month public education campaign carried out by the Tax Administration in which taxpayers were reminded of their obligation to file their income tax annual and estimated returns for 2009 and 2010, respectively, and pay the taxes due by March 15," the authority said.

"During the lead up to the deadline, the administration also conducted an extensive islandwide Special Taxpayer Service Programme to assist small business operators to complete their tax returns," the authority added.

According to the authority, returns filed after the March 15 deadline will be classified as late, and payments due will be subject to 40 per cent interest per annum, calculated daily.

"Persons are therefore urged to file their outstanding returns without further delay," the authority said, adding that for returns which still remain outstanding at the end of the notice period, the administration will take one of two options:

* Use its automated system to generate estimated income tax assessments. Under the Income Tax Act, any assessment raised by the commissioner is subject to a maximum penalty of 300 per cent; or

* The administration may exercise its option to take persons to Court for failing to file their returns. Under the Income Tax Act a person can be fined up to $10,000 for each outstanding return or be imprisoned for up to a year.

The authority pointed out that Court action would not absolve the delinquent taxpayer of filing outstanding returns and paying outstanding amounts.

"These enforcement actions will not apply to persons who had made a written request and received permission from the commissioner, Inland Revenue Department to file their returns later than the March 15 due date," the tax authority said. "It must be noted, however, that in these cases the outstanding returns and relevant payments must be submitted by the date as indicated in the permission granted, otherwise the compliance actions will be applied."