Sars sure can make you pay

Taxpayers should be aware that if you have outstanding tax debt, Sars has the power to reach into your bank account and take the outstanding funds by instructing your bank, as its agent, sometimes even without notifying you.

The Tax Administration Act (TAA) provides that Sars may notify any third party to pay any money it holds on your behalf to Sars. Failure to comply makes the bank (or your employer) personally liable for your debt.

Taxpayers are especially annoyed if Sars acted on a false tax debt or if proper procedure was not observed. Sars is required to adhere to the procedure prescribed by the TAA, which imposes procedural requirements onto them; for example, to send final demand 10 business days before it proceeds with collection.

Alarmingly, however, there are cases where Sars have withdrawn funds from taxpayers’ accounts without them being notified. However, the withdrawal can be reversed either way.

Taxpayers must be alert with any attempts from Sars to communicate with them – as ignorance of the legal process will be to your detriment. Almost always the biggest mistake taxpayers make is ignoring their tax status.

Useful tips:

Draw a “statement of account” from your Sars e-filing profile. If the statement shows an outstanding debt, albeit erroneously, act immediately. Where you’ve objected against an assessment, this doesn’t suspend the Sars collection process. Always do a separate suspension of payment request, containing the correct motivation. Even where there was an obvious mistake on Sars’ part, incorrectly claiming that you owe taxes, or where a Sars official has assured you that the mistake will be rectified, this doesn’t legally bind them to solve your problem. Sars’ debt collection department is a separate business unit, with its own objectives. It is removed from normal tax assessments and will pursue any outstanding debts if no suspension is in place. Unfortunately, the innocent taxpayer may get the treatment under these harsh provisions, but as tax is ultimately a function of law, in these instances there is always a legal recourse.

Du Toit is an attorney at Tax Consulting SA

Moneyweb

Areader asks: I’m 22 and want to start investing for retirement with an lowcost annuity. I can contribute about R1 250 per month (increasing 10% per annum plus).

My financial advisor proposed starting with the Sanlam Cumulus Echo Retirement Annuity (fees: 4% upwards). What about 10X and Sygnia with lower fees? Do I choose a retirement plan from well-known companies like Allan Gray or Sanlam.

Sterling Private Clients director Janet Hugo answers:

SA has two types of retirement

Even where there was an obvious mistake on Sars’ part ... this doesn’t legally bind them to solve your problem.

Jean du Toit Tax Consulting South Africa