The Commonwealth Ombudsman has slammed the taxation office for failing to properly handle complaints about misused tax file numbers. A report released on Tuesday detailed eight cases where the numbers were compromised or linked to the wrong person.

In one case, a welfare recipient was hit with a $7000 Centrelink bill and a $2250 tax penalty after another taxpayer made an error with an online tax return. In another case, the Australian Taxation Office (ATO) wrongly assumed a pensioner from a non-English speaking background had two tax file numbers, which meant income was incorrectly attributed to her. Both cases took two years to resolve. Ombudsman Allan Asher said the ATO’s response to tax file complaints was unreasonable.

“Our investigations have shown a systemic failure by the ATO to properly recognise and respond to the issues faced by taxpayers,” he said in a statement.

The ATO’s second commissioner, David Butler, admitted it could have handled the cases better.

“We have carefully reviewed the draft report and agree that the experiences for some taxpayers with compromised tax file numbers have been less than satisfactory,” he said in a letter to the ombudsman dated June 29.

But he insisted the errors were not typical. The tax office has since adopted five recommendations by the ombudsman. Among them, it set up a client identity support centre in late 2009 to investigate identity fraud. It has also taken steps to monitor cases of compromised tax file numbers, and has hired case managers to contact affected taxpayers. An ATO spokeswoman said the tax office would continue to work with the Commonwealth Ombudsman on future concerns.

There have been an embarrassing series of revelations about the conduct of the Tax office in relation to a number of issues recently. The handling of the tax matter related to Paul Hogan was a situation where the tax office was forced into an embarrasing reversal of its decision to prevent Mr Hogan from leaving Australia whilst an investigation into his affairs continued.