PRSI - PRSI Refunds Section

Factors

1. GENERAL

Refunds of PRSI are made to employers and employees where contributions have been paid in error. Cases where a decision is required on the correct rate of PRSI contribution are referred to the Department's Scope Section. In cases where a refund is due, amendments to the social insurance record of the person involved may be required. In addition, any refund made to a person where PRSI or the class of PRSI was incorrectly paid will take account of any benefit paid as a result of the incorrect PRSI and any such benefit incorrectly paid may be deducted from the refund of the person involved.

Most refunds arise as a result of people paying at the incorrect rate and relate mainly to the following: company directors whose class of insurance changes from Class A to Class S; persons either under or over the wage or salary threshold or ceiling; employees over 66 years* who continue to pay the full PRSI rate applicable to their employment; and permanent and pensionable employees of Local and Public Authorities who have paid at an incorrect PRSI rate. Medical cardholders**, recipients of Widow's Pension, Deserted Wife's Benefit, One Parent Family Payments, and those with EU equivalents are not liable to pay the Health Contribution.

In these cases employers may not be aware of the employee's status, resulting in the wrong rate of PRSI being deducted. When this is discovered refunds are applied for and granted.

* Employees who continue in employment after the age of 66 should pay PRSI at Class J or Class K.

** Holders of GP Visits Cards introduced by Section 58 of the Health Act, 1970 (as amended by the Health Act, 2005) are not exempted from liability to pay health contributions.

2. Legislation

The statutory provisions relating to the refund of PRSI contributions are contained in:

- Chapter 6 of Part 2 of the Social Welfare Consolidation Act, 2005.

- Chapter 2 of Part III of the Social Welfare (Consolidated Contributions and Insurability) Regulations, S.I. No. 312 of 1996, as amended by the Social Welfare (Consolidated Contributions and Insurability) (Amendment) (No. 2) (Refunds) Regulations, 1997 (S.I. 291 of 1997), the Social Welfare (Consolidated Contributions and Insurability) (Amendment) (Refunds) Regulations, 2002 (S.I. 268 of 2002), and the Social Welfare (Consolidated Contributions and Insurability) (Amendment) (No. 1) (Refunds) Regulations, 2003 (S.I. 698 of 2003).

3. Administration

In cases where the refund is due to

a change of class of contribution,
earnings under the threshold or over the ceiling,
health contributions paid in error,
errors in calculation,
PRSI paid in error where certain exemptions apply such as in maintenance payments or Maternity Benefit or Illness Benefit cases,

claims for refunds should be made in writing and a copy of the P60 for the previous tax year should be sent to:

PRSI Refunds Section,
Department of Social and Family Affairs,
Oisn House,
212-213 Pearse Street,
Dublin 2.

Tel: (01) 6732586

Fax: (01) 6732460

In cases where the refund is due to Special Contributors (see paragraph 10 following) claims for refunds should be made in writing and a copy of the P60 for the previous tax year should be sent to:

PRSI Special Collection Section,
Social Welfare Services,
Cork Road,
Waterford.

Tel: (051) 356010

Fax: (051) 877838

PRSI refunds are also due where pension contributions, e.g. PRSA, RAC and AVC, are made other than through a scheme provided by an employer. Prior to making a claim for a pension PRSI refund to the Office of the Collector-General, an application for a refund of tax on the pension contribution must be made to the applicant's tax district at the end of the tax year. Claims for refunds in respect of pension contributions should be made in writing and a copy of the P60 for the tax year to which the claim relates should be sent to:

Customer Services Section,
Office of the Collector-General,
Sarsfield House,
Limerick.

Lo Call 1890 203070

Fax: 061 401015

4. Request for Refunds

Requests for refunds can be initiated by a Client, his/her Employer, his/her Accountant, the Department's Pensions Services Office in Sligo, the Department's Scope Section or the Revenue Commissioners. Applications for refunds cannot be made earlier than the last day of the contribution year in respect of which the contributions were paid. An application form requesting the details of the refund will be sent to the client or it may be downloaded from the Department's website. In addition to the enquiry to the client, Refunds Section may also request other relevant information from the person's employer, for example, an original P60 form given at the end of the tax year by the employer to the employee in respect of the previous tax year, a P35 end of year return by the employer to the Revenue Commissioners, or a statement of earnings in respect of each class of contribution where more than one class was paid in a contribution year. In cases where the person is over the age of 66 and where the date of birth has not been recorded as verified on the Department's records, a birth certificate is required in order to process the refund due to the client and his/her employer. If an employer fails to respond to a request for information, a Social Welfare Inspector may visit the employer to obtain the relevant information.

5. Categories of Refund

(a) Pension Element Refund

Compulsory Social Insurance ( PRSI) for employees commenced in 1953 and for the self-employed in 1988. The pension element of the contributions paid by both employed and self-employed contributors may be refunded in the case of contributors who entered insurable employment either as employees or self- employed after they had attained the age of 56 and who have no entitlement to a State Pension (Contributory).

(b) PRSI Contributions paid at the wrong rate

Where contributions have been paid at an incorrect Class or sub-Class of PRSI a refund of the excess PRSI contribution is made. For example:-

(i) Persons in self-employment who paid PRSI contributions through the PAYE system at an incorrect rate (i.e. where Class A was paid instead of Class S).

(ii) Persons in respect of whom the Class A rate of contribution was paid instead of Class J. [Note: The Class J rate is payable in respect of employees aged 66 years or more; or employees whose total weekly earnings are less than 38.00. In addition, Class J applies to Public Servants who are insurable at the modified (Class B, C or D rates of PRSI) in respect of any concurrent second employments].

(iii) Employees who are Medical Card holders; recipients of Social Welfare Widow's/Widower's Pension; One Parent Family Payment; Deserted Wife's Benefit, or certain EU pensions and payments, are exempt from the Health element of the PRSI contribution (i.e. they are liable at the sub-class of contribution - A2, B2, C2, etc.). Refunds arise if the full contribution has been paid.

(c) PRSI Contributions paid in error

(i) Persons in self-employment who paid PRSI contributions through self-assessment at an incorrect rate. [Public Servants who pay the Class B, C or D Rate of PRSI and who are concurrently self-employed have no PRSI liability in respect of the self-employment]. Class S contributions are sometimes paid in error.

(ii) Persons who paid voluntary contributions after the expiry of the statutory time limit (more that 12 months after the end of the contribution year to which they relate).

(iii) Persons who paid voluntary contributions and later became liable to pay compulsory PRSI for the year in question.

(iv) No PRSI contributions are payable in respect of persons aged under 16 years. Sometimes Class A or J contributions are paid in error.

(d) Maintenance Payments

In the case of a separated person who makes an enforceable maintenance payment, PRSI is levied at the point at which it is earned as part of the person's earnings/income and also as income in the hands of the receiving spouse. To prevent a double payment of PRSI in such cases, Section 37 of the Social Welfare Consolidation Act 2005 provides for the return of social insurance contributions to the maintenance payer from 6 April 2000.

(e) Earnings thresholds and ceilings for PRSI Liability

(i) There are special reliefs under the legislation in relation to the levels of PRSI contributions payable by employees on low earnings. Such employees may be either fully or partly exempt from PRSI liability. Refunds may arise if the full contribution is paid in error.

(ii) Employees whose earnings exceed an upper statutory earnings limit have no liability to pay the Social Insurance element of the PRSI contribution on the portion of earnings that exceeds the upper limit - although they may still be liable for other PRSI levies etc. Refunds of contributions may arise if PRSI contributions have been paid over the earnings thresholds and ceilings.

(f) Exemptions from PRSI Liability

(i) Persons issued with E101 certificates as migrant workers within the EU or non- EU nationals on temporary assignment to Ireland may be exempt from paying PRSI contributions.

(ii) Employer Exemption Scheme - Employers who qualify under this scheme and who hold exemption certificates issued by the Department may be entitled to a refund of the employer's element of any PRSI contributions paid in error.

6. Factors affecting the amount of Refunds

The following amounts shall be deducted from refunds:

The amount of any contributions paid in error.
An amount equivalent to the amount of any benefit paid to a client by reason of such contributions having been paid in error.
An amount equal to the amount of any outstanding PRSI liability.

7. Interest on Certain Refunds

Article 80 (1) of S.I. 312 of 1996 provides for the payment of interest on refunds paid in cases where the refund is in respect of the pension element of the PRSI contribution and where there is no entitlement to a State Pension (Contributory) or a State Pension (non-Contributory)[see paragraph 5(a) above]. The interest is calculated by reference to changes in the Consumer Price Index. There is no provision for interest to be paid on any other types of refunds.

8. Payment of Refund after death

On the death of an insured person, a refund due in the name of that person may be claimed by his/her beneficiaries, personal representatives, next-of-kin, creditors or other such persons as deemed by the Department to be beneficially entitled.

9. Lost Cheques

Cheques for refunds that are mislaid, stolen or destroyed are cancelled and the client is asked to forward written notification of the loss to PRSI Refunds Section. On completion of an indemnity form by the client a duplicate cheque can then issue.

10. Special Collection System

PRSI contributions for employees whose employment is insurable under Irish social security legislation and who do not come within the PAYE income tax system are collected through the Special Collection system of the Department of Social and Family Affairs in Waterford. Categories catered for by this collection system include Health Board Home Helps, Sub Postmasters, Social Welfare Branch Managers, locally employed non-diplomatic Embassy employees and Irish workers temporarily posted abroad.

If it is established after the examination of end of year returns that remittances of PRSI contributions were paid incorrectly to Special Collection Section, refunds are paid to the employer/employee by the Special Collection Section.