Tax refunds issues persist: Ombud

The Office of the Tax Ombud says it is not yet satisfied with the manner in which Sars deals with tax refund delays.

“There’s some improvements, but … there are still issues,” says CEO Eric Mkhawane.

According to the Ombud’s 2017/18 Annual Report the majority of complaints reviewed between April 1 2017, and March 31 2018, related to refunds, with dispute resolution and assessments also high up on the list.

After getting approval from then finance minister Pravin Gordhan to investigate the issue in March 2017, Tax Ombud Judge Bernard Ngoepe found Sars’ system allowed it to unduly delay the payment of verified refunds to taxpayers in certain cases. A systemic issue is regarded as the underlying reason for a complaint and may impact many taxpayers.

The Ombud’s latest report still lists the delay in the payment of refunds as its number one serious issue.

“Various engagements have taken place between the OTO [Office of the Tax Ombud] and Sars. In the last engagement the OTO requested Sars to provide specifics on the implementation of each of the OTO’s recommendations to enable it to monitor the effectiveness efficiently. Sars is yet to respond,” the report says.

Mkhawane says the Ombud has asked Sars to provide it with the specifics of what it’s doing to address the issues.

Acting Sars Commissioner Mark Kingon says Sars dealt with the Ombud’s 12 refund findings. Two issues are still a work in progress.

The first relates to “special stoppers” previously placed on refunds where a high risk of fraud was believed to exist.

It usually required taxpayers to visit a branch to submit supporting documents. Kingon says Sars is changing the whole stopper process; it’s hoped it’ll be finalised by year-end.

The second relates to an Ombud recommendation that Vat and diesel refunds, which are declared on the same return, be split to avoid delays. Kingon says Sars has implemented improvements but the process is intricate and may take some time.

In a statement on Tuesday the Ombud said resolving the top 10 refund complaints resulted in R446 million in VAT and corporate income tax refunds being paid out to taxpayers. The highest amount paid was a VAT refund of roughly R158 million.

Ngoepe announced in September that he’d received approval to launch two separate investigations into Sars, related to problems with Pay-As-You-Earn statements of account and alleged non-adherence to dispute resolution timeframes.