SARS Agents lurk Amongst Us
30 September 2010
Posted by: Author: Vedika Andhee
SARS Agents lurk Amongst Us
Your employer or bank may be compelled to make payments on your behalf to SARS—even without your knowledge
SARS Commissioner Oupa Magashula recently released a statement that SARS will get tough on tax offenders owing money to the taxman.He intends taking money they owe the taxman out of their bank accounts, and by attaching their salaries.This has caused concern amongst taxpayers.This article helps to answer whether SARS has the authority to do this.
SARS has the authority to recover taxes using various methods.The most common method is via the employer or via the taxpayer’s bank account. For years, SARS has recovered taxes from employees by requesting that employers withhold the requisite amount and pay it to SARS prior to paying the employee.This was done via a so called "garnishee order” appointing the employer as SARS’ "agent” in terms of Section99 of the Income Tax Act.Employers were obliged to comply,irrespective of objections from the employee.
An increasingly common method of recovering taxes at the moment is via the taxpayer’s bank account. Effectively, SARS appoints the bank as its agent to recover any monies due to it, by recovering the money from the taxpayer’s account.This places a burden on any person appointed as an agent, since SARS has remedies available against an un-cooperative agent, as it does against the taxpayer. In other words, SARS has the ability to recover the monies directly from the agent, if the agent does not comply with its request.At what stage will SARS adopt this route, because surely it must bean action of "last resort”?
There are unfortunately no clear guidelines available to the public in this respect.Logically, these must be methods of last resort.Communication via mail is not always successful, especially bearing in mind that the taxpayer may have changed their address and may not have received the notification from SARS that they owe money.It is therefore important that SARS contacts the taxpayer via telephone in order to communicate that there is a liability due, and make appropriate arrangements for payment.
It is also important that the taxpayer receives proof that the money is due, as there are quite a few telephone scams out there.In some instances, where taxpayers do receive these telephone calls requesting payment,SARS must ensure that the taxpayer is given sufficient time in order to make the payment.
At the end of the day,communication around the issue is important. SARS needs to lay out the rules relating to when it will invoke t he mechanism of appointing an agent, as well as creating a mechanism for the s tagger ed payment of the outstanding tax over a period of time.
There are further complications around this aspect which would need to be investigated, in particular the relationship between the client and the bank.One could argue that in instances where a bank has been instructed to act as agent and withdraw the funds from the individual’s bank account, it should notify the client of this instruction from SARS.
Unfortunately for taxpayers,SARS has the might of legislation on its side in the form of the dreaded Section 99, in terms of which SARS can appoint an agent and instruct such agent to recover any tax, interest, or penalty due from money held under its custody.Whether or not such legislation is a contravention of individuals right to privacy is a question for another day.
Source: By Vedika Andhee (Tax breaks)