Taxpayers fall foul of SARS after objections
Several taxpayers have received threats from the South African Revenue Service (SARS) that they are facing legal action because their tax payments are in arrears.
However, it appears many of these taxpayers have filed objections to the assessments issued by SARS. The objections were also accompanied by applications for the suspension of payment until the disputes were settled.
SARS acting spokesman Sicelo Mkosi says that once a suspension has been applied for, its processes do not allow for collection steps to proceed until 10 days after SARS has notified the taxpayer of the result of the suspension request.
“If taxpayers are receiving final demands in this period, that is incorrect. Such examples should be escalated to SARS via the SARS complaints process so that SARS can rectify the situation,” he said.
Tax practitioners have raised concern that SARS does not comply with the 60-day timeframe allowed for responses to objections.
When the lack of response is queried by e-mail to the SARS contact e-mail addresses, the response is that the turnaround time for a query is 21 working days.
“The taxpayer now faces the prospect of having to wait effectively another month before a response is produced,” a tax practitioner says.
He also says the debt recovery process seems to be detached from the electronic filing process, where the objection and suspension of payment applications are lodged. “Demands for payment are sent to taxpayers although the process is still subject to the requirements of the dispute and suspension of payments process,” he says.
Mkosi says practitioners can raise their concerns with industry bodies such as the South African Institute of Chartered Accountants, the South African Institute of Professional Accountants and the South African Institute of Tax Professionals.
According to Mkosi, it is important to note that once a person has applied for suspension on SARS’s electronic e-filing system, the SARS systems are updated.
However, Ruaan van Eeden, a member of the South African Institute of Tax Professionals tax administration work group, says suspension of payment requests do not appear to reflect on the SARS system.
“Also, SARS’s system does not appear to reflect a suspension of a tax debt even after a suspension has been granted. As a result, tax debts are collected with no regard to the suspension, resulting in the undue recovery of tax debts.”
The situation is exacerbated by the fact that underpayment penalties are levied when a successful suspension of payment request for a specific period is not noted on the system. Taxpayers may also have tax clearance certificate applications rejected, on the basis of outstanding taxes, even though the relevant tax debt is suspended, Van Eeden says.
Ettiene Retief, chairman of the South African Institute of Professional Accountants’ national tax and SARS committee, says it is important that tax practitioners and taxpayers alert their industry bodies to these problems.
Retief warns that the mere filing of an application for suspension of payment does not mean it has been successful.
There are certain requirements to meet, such as the level of hardship suffered by the taxpayer if the payment is not suspended.
However, he shares the frustration of taxpayers who are left in the dark because SARS fails to adhere to stipulated timelines, and because of the difficulty in getting a speedy resolution to their queries.
Eric Mkhawane, CEO of the Tax Ombud, says delays in the finalisation of objections and appeals and SARS taking collection steps when it is legally barred from doing so have been identified as systemic issues.
This means taxpayers do not have to exhaust the SARS internal complaints resolution mechanisms before lodging complaints with the ombud.
“We would like to urge all affected taxpayers to lodge formal complaints with our office so that we can engage SARS to resolve their issues,” says Mkhawane.