More power to the taxpayer
IN JANUARY, amendments to the Tax Administration Act gave the ombud more powers when addressing taxpayers’ complaints and strengthened its independence from Sars.
Previously, the ombud could not employ his own staff directly, but had to do so in consultation with the Sars commissioner, and staff were paid by the revenue service.
The ombud, Judge Bernard Ngoepe, has admitted this is not an ideal situation, because his office had to investigate complaints against Sars itself. That’s a bit like biting the hand that feeds you.
Now, the ombud’s term has been extended from three years to five. And in cases where recommendations have been made but Sars or the taxpayer don’t accept them, reasons must be provided to the ombud within 30 days.
Advocate Eric Mkhawane, the office’s chief executive, views the amendments as encouraging and a step in the right direction in ensuring the ombud can fulfil his mandate without a perception that his office is an extension of Sars.
In a statement, the office said they’re now mandated to review “any systemic and emerging issues related to a service matter or the application of the provisions of the act, or procedural or administrative provisions of the Tax Act, bringing the OTO (office of the tax ombud) in line with similar entities in other countries, such as Australia, the US and Canada”.
The probe, announced by the Finance Ministry, is great news for taxpayers, who have complained bitterly in recent months of the torpid refund process.
Marjorie Low wrote to me last week: “I am an 89-year-old widow who has been a faithful taxpayer for more than 60 years.
In February 2015 I was advised by an assistant at Sars that I was due a substantial refund, which would be paid out on receipt of certain documentation. This has been duly presented, and I was told to expect a response within 21 days.
“As nothing happened and phone calls were unsatisfactory, I made a second visit, and was asked to resubmit the documents. This was done, and I was advised that I had done everything required of me and the matter would be settled in 21 days.
“After 22 days, I phoned again and was told that my file had not yet been sent to the department which handled account refunds!
“It is totally unacceptable that Sars does not hesitate to penalise taxpayers with penalties and interest on late payments, while it takes over a year to pay a refund.
“I was interested to hear on radio today that there had been so many complaints about late repayments that the minister of finance was investigating the matter! I look forward to a satisfactory result.”
Nicky White had a similar complaint.
She has waited for months for her refund because Sars declined her claim for home office expenses – this was despite the fact she had moved her financial consultancy practice into her former home.
Her tax consultant repeatedly raised the issue with Sars.
Sars admitted that, by the end of last month, outstanding VAT refunds amounted to R19.6 billion of the R129.3bn claimed during the 2016-17 tax year‚ Finance Minister Pravin Gordhan said on Thursday.
Gordhan said 58% and 80% (R15.6bn in terms of value) were outstanding for up to one month.
A total of 3% and 1% (R148.3 million) had been outstanding for 10 to 12 months. Sars was quick to issue a statement, saying it welcomed the investigation.
The office told me: “Sars has noted the complaints and frustration of taxpayers about outstanding refunds, particularly pertaining to VAT. We also noted that taxpayers may perceive this as a lack of concern, care and efficiency by Sars, but this cannot be further from the truth.”
They denied withholding funds too, saying: “It is not in the interest of Sars to withhold refunds. There are delays in some refunds, particularly where our systems have detected risk…
“By January 31, 2017 Sars paid refunds totalling R155.4bn versus the same period last year of R142.8bn. This is R12.6bn (9%) more than the previous year.
“To date Sars has prevented R23.8bn in fraudulent refunds from being paid and hence the additional scrutiny being applied to high-risk cases.”
The investigation will no doubt be of interest to the tens of thousands of taxpayers who are waiting for their refunds.
If you would like to contact the Tax Ombud visit http:// www.taxombud.gov.za, e-mail complaints@ taxombud. co. za or call 0800 662837 toll free.