GIVING A VOICE TO TAXPAYERS
The first tax ombud’s report raises important concerns about Sars processes and has already made a difference to ordinary taxpayers in resolving outstanding issues, writes Maya Fisher-French
In the first six months of office – between October 1 last year and March 31 this year – the tax ombudsman’s office helped 61 taxpayers to resolve their service problems with the South African Revenue Service (Sars). These were frustrated people who could address complaints they had not been able to resolve through normal Sars channels. The ombud aims to resolve issues within 15 days, says tax ombudsman Judge Bernard Ngoepe.
It might take longer if it is a complex issue, but the taxpayer will get feedback on the case, he adds.
Of the complaints that the ombud investigated, 80% were resolved in favour of the taxpayer.
“People feel very strongly about tax; there are frustrations, and emotions run high. We hope to be able to mitigate their problems and I think the office will make a difference. We have received a lot of thanks where we intervened,” says Ngoepe.
“We have expedited the refund of VAT that had long been held back and enabled small businesspeople to regain their cash flow.
“We intervened where documents had been given to Sars but not picked up, or where Sars made the wrong payments or took down an incorrect change in details.
“I’m sure we’ll come across more. Our role is to facilitate the resolution of those problems.”
In some cases, an apology from Sars was recommended, says the CEO at the office of the tax ombud, Eric Mkhawane.
Ngoepe says Sars needs to educate people about their rights relating to tax collection and to have a client service charter that taxpayers are aware of.
“Based on the number of complaints that have come to us incorrectly, it’s clear people don’t know how to deal with their problems. Sars needs to embark on a programme to inform people how to complain.”
The ombud’s office received 670 calls from the public. The bulk (514) were enquiries and 64 were complaints outside of the ombud’s mandate.
There were two main reasons for the ombud not investigating the matter: either the complaint was older than a year from the ombud’s appointment (October last year) or the person had not tried to resolve the issue directly with Sars.
The office also does not deal with legislative tax issues or disputes about the tax due. If people or companies disagree with their tax assessments, they have to raise it with the special income tax courts.
Concerns about Sars’ e-filing system have been raised in the first annual report issued by the tax ombud’s office. In several cases, the correct banking details had been changed on the e-filing system and refunds had been paid into the wrong bank accounts. In other cases, fraudulent e-filing profiles had been opened in taxpayers’ names with fraudulent tax returns submitted and therefore, refunded.
The ombud’s report also lists problems with identity theft. In one case a fraudster submitted a bogus 2010 tax return in the taxpayer’s name. This resulted in a duplicate 2010 assessment. Fraudulent documents were also submitted at a Sars office for a new bank account so the fraudster could get the refund.
The report says that in response to this investigation, Sars has improved the process of bank-detail validation to ensure that only the taxpayer or an authorised representative can request changes to banking details.
“Sars takes the security of its e-filing system very seriously and any weaknesses identified are closed as quickly as possible,” says Sars spokesperson Adrian Lackay. He says that, like other financial institutions, Sars faces a constant barrage of attempts to defraud it.
But in comparison with the millions of electronic transactions processed yearly by Sars e-filing, only a small number of cases of weaknesses in the system’s security were reported to the tax ombud.
“In all the identified cases, Sars has resolved the matter and the taxpayers concerned have not suffered any loss. The risks identified by these cases led to Sars making changes in its systems to prevent similar fraud from re-occurring,” says Lackay.
He says this includes the process by which changes to banking details are validated with banks to ensure that the account to which the refund is paid belongs to the taxpayer concerned.
When Sars is not able to validate the information, the taxpayer has to visit a Sars branch. Sars’ processes have been further improved by the introduction of the tax practitioner verification and registration, as well as the introduction of the single registration process.
“Sars can assure all taxpayers that e-filing is secure,” says Lackay.
“And Sars will continuously monitor all risks and make the necessary changes to the system to ensure the integrity of all taxpayer data.”
The ombud also raised concerns about the incorrect classification of people as provisional taxpayers. This meant they were given penalties and interest was charged to them incorrectly.
There was also a lack of procedures for registering only those taxpayers who were liable. The report raised this as an ongoing issue. “This is an automated process that should be reconsidered as penalties and interest are levied daily on unsuspecting taxpayers” who should not be registered as provisional taxpayers.
“The system problem has been going on for years and has still not been corrected.”
The ombud also ruled on other procedural issues such as where information was captured incorrectly and resulted in errors in the amounts taxed, or funds withdrawn erroneously from bank accounts.