Tax debt was $4 billion at the end of June 2008 and Inland Revenue says it could more than double within the next five years.
Kevin Brady (Auditor-General) released a report which mentions growth rate is more than they can handle with current resources.
"Inland Revenue is aware of the challenges it faces and is updating its tax debt strategy to respond to these challenges," mentions Mr Brady.
"It is proposing to better understand taxpayers, provide taxpayers with improved online tools, and pilot new approaches designed to enhance its processes for collecting tax debt."
The report states over 200,000 cases of tax debt as at end June 2008.
Mr Brady said the departments management of tax debt was satisfactory once debt cases were assigned to officers, but the work was prioritised and low risk cases were unlikely to be assigned.
"Inland Revenue has limited information to monitor the effectiveness and efficiency of its tax debt collection work," he said.
"It was aware of how many tax debt cases it needs to manage, but it was not able to tell my staff how many tax debt cases it was actively managing."
Mr Brady said that in his view, such information was fundamental to the way it used its resources.
"It is important that Inland Revenue is effectively and efficiently managing tax debt at any time...but even more so given the current economic climate and the pressure that the Crown faces with forecast deficits," he said.
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