A payroll company that serves IT contractors says the Australian Taxation Office froze its bank accounts rendering it unable to process contractors' pay since 27 April.
Contractors reported earlier this month that Plutus Payroll had not paid them.
Plutus, which does not charge contractors anything for its services, put up a notice on its website saying that it had been unable to process pay since 27 April.
A public message about the ATO being the reason for its woes was added on Friday.
{loadposition sam08}In the message, the company said: "Our dispute is with the Australian Taxation Office who believe that Plutus owes the ATO money.
"Acting in a draconian and unfair manner, the ATO froze Plutus’ bank accounts on 27 April without prior warning or any consultation.
"We received no notice of intention to audit, no complaint and no other advance warning of non-compliance from the ATO. When the ATO acted, without notice, they froze our bank accounts - and we became unable to pay our contractors the money owed to them."
The Plutus message said the company had the option at that stage to put the company into administration or receivership. It denied that it owed the ATO any back-taxes.
"Since that time, we have implored the ATO to allow us to release the funds so that we could pay you," it said.
"We went further and agreed that the ATO could retain all of the other bank account funds - if they would just agree to let us pay you, while the dispute could be considered by the Courts."
Given that the ATO did not change its position, Plutus said it had now "instructed our lawyers to urgently file proceedings in the Federal Court and attend before a Judge of that Court on Monday".
"We have asked the Court to intervene and order the ATO to release the company’s bank accounts so we can finally pay our contractors, ending their hardship and stress – which we contend has been directly, unnecessarily caused by the ATO’s extraordinary, aggressive exercise of their powers – done without warning and certainly without any consideration of the hardship caused for everyone affected by their actions," the message said.
iTWire contacted the IT Professionals Association on Thursday, asking whether any of its members had been affected by the Plutus problem. The association has not yet responded.