How can I request SARS to reduce or write-off my tax debt?
03 March 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: A client of
mine operated a business until very recently but had to give it up because the
business no longer proved to be financially viable. Currently she has no income
of her own and she owes SARS some VAT.
Taking into account her current financial position, I was
wondering whether there exists any channel through which negotiations could be
initiated to reduce the overall tax debt in this regard. Under what conditions
would the tax legislation allow for the reduction or write-off of a tax debt?
A: Section 200 of
the Tax Administration Act (TAA) allows a taxpayer to approach SARS and request
that the full or portion of an outstanding tax debt be "compromised”. Section
201 TAA sets out that the request must be in writing and must contain all the
details stated in that section.
SARS will then consider the request per the guidelines in section
202 and the prohibitions in section 203 TAA. Should SARS agree to partially or
in full compromise the tax debt a written agreement will be entered into and
the taxpayer should ensure that she can meet the terms thereof, including any
payment terms, otherwise SARS may not be bound to the terms and proceed to
elect to recover the original debt per s205 TAA.
The request should be submitted to the local branch for
consideration. Should SARS not respond or provide any correspondence as to them
having received and considering the request, please follow-up with the call
centre within 21 days or contact us to escalate the matter to SARS debt
management in the region where the taxpayer is situated.
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.