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

CityPress - - Business -

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.

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