The Ombudsman has described as "unbelievable" the refusal by the Revenue Commissioners to pay interest on money owed to those who have been overtaxed.
Mr Kevin Murphy told the Dáil's Finance Committee this morning the Revenue had accepted a number of public service widows and others had been taxed more than their liability.
Mr Murphy informed the committee that while the Revenue was willing to refund the money, it was refusing to pay interest on the money, some of which dates back to the 1980s.
The Revenue claims there is no specific statutory power to enable it to pay compensation.
Mr Murphy said he found it unbelievable that any public body which implements a formal recommendation of mine, made under statute, could face a challenge unless there was an actual statutory bar preventing their doing so.
The Chairman of the Revenue, Mr Frank Daly, said he was sympathetic to those affected in this case but that he could not act on a recommendation by the Ombudsman without legislation.
Labour's spokesperson on finance, Ms Joan Burton, said she was shocked by the tone and content of the Revenue's response.
Ms Burton said if a taxpayer has been wronged by Revenue they should be put back on the footing they were on before the error.
Independent senator Mr Joe O'Toole said he found the Revenue's argument "unpersuasive and flawed."
