Are your taxes taxing you?
27 May 2015
Posted by: Author: Neesa Moodley
Author: Neesa Moodley (Fin24)
Taxes are one of the few absolute certainties in life and can raise a feeling of dread in most people, especially when it comes to filling out tax returns. But what do you do when you have a dispute with the SA Revenue Service and who do you turn to?
Naeem Khan found that filing a complaint with the tax ombudsman meant his dispute with the taxman was quickly and easily resolved.
Naeem Khan was horrified when the SA Revenue Service (Sars) simply took a refund due to him in lieu of a payment that was being disputed. He had lodged an objection to his tax assessment and simultaneously requested that payment of the disputed amount be suspended, pending finalisation of the dispute.
Although Sars agreed to suspend payment of the debt, a refund shortly thereafter fell due to Khan and Sars held back the refund to set off the disputed debt. Khan lodged a complaint with the office of the tax ombud and found Sars was in contravention of the procedure relating to suspensions of debt. His refund was released and paid to him.
Advocate Eric Mkhawane, CEO in the office of the tax ombud, says Sars follows a standard procedure when it comes to collecting money due by the taxpayer.
If you owe Sars money, you should receive a letter of assessment from Sars informing you of how much you owe and providing you with a date by which the money must be paid. If you have chosen eFiling as your mode of communication with Sars, you may find you have to log into eFiling to check for a notification of your assessment.
"It may happen on the odd occasion that a taxpayer may not receive a notification, for example, if there is a postal strike. It is important to note that although Sars’ standard practice is to provide you with notification of money due by you, it is not legally required to issue this notification,” says Mkhawane.
This means that, for example, if you do receive notification of the amount you owe Sars and Sars exercises its right to collect the money due directly from your bank account three or four months later, it has the legal authority to do so.
When you approach the tax ombud to help or intervene in a dispute you may have with Sars, the office of the ombud will usually look for a communication trail and, in particular, a letter of demand. If there is no traceable letter or communication trail, the office of the ombud can challenge Sars.
Mkhawane says he has heard of instances where amounts that are still being disputed by the taxpayer have been collected from their bank accounts by Sars.
"When you receive your assessment from Sars and you disagree, you have to lodge a formal objection with Sars stating the reasons you disagree with the assessment. However, it is important to note that the objection alone does not suspend the payment due.
"You have to send Sars a separate notification informing its offices that there is a dispute and then request that collection of any money due is suspended until the dispute can be resolved,” he says.
Mkhawane says that if Sars chooses to simply deduct the amount due from your bank account, it is not viewed as an abuse of power as legislation allows Sars to do exactly that.
What is worth noting is that if Sars notifies you of a date when payment is due, then Sars does not have the right to deduct the money due before that payment date.
- Never disregard or ignore any form of correspondence from Sars.
- You should take into consideration the fact that Sars allows you to structure repayment arrangements if you are unable to pay a lump sum payment. However, you will pay interest on the amount due if you choose to make payments over several months rather than as a lump sum. The longer you take to pay, the more interest you will incur.
- If you have requested repayment arrangements and Sars declines your request, the tax ombud can only entertain your complaint on the basis that Sars ignored your request or failed to respond to you. The office of the tax ombud would have to be able to prove that Sars did not consider your request at all.
- If you undergo debt counselling, Sars is treated just as any other creditor, although it may be a preferred creditor in terms of ranking of importance.
- Always approach Sars first and check if you have a valid complaint. Often simple complaints can easily be resolved.
- Note that you cannot complain on behalf of another taxpayer.
- When you are outlining your complaint, list events in chronological order. Lay your complaint out logically and remove emotion.
- Make sure you have supporting documents on hand to support your complaint.
If you have a tax complaint, your first port of call should be Sars. If the complaint is not resolved to your satisfaction, you have the right to escalate the complaint to the tax ombud’s office. Advocate Eric Mkhawane, CEO in the office of the tax ombud, says his office aims to resolve complaints within 15 working days. This is the procedure:
- Once your complaint is received, the tax ombud checks that it falls within his mandate.
- The complaint is logged and an investigation is launched. Note that the office of the tax ombud has full access to the Sars computer system, which means that the tax ombud is able to directly access a correspondence trail.
- Sometimes the complaint is not one that can easily be resolved and the ombud has to wait for Sars to complete an internal investigation.
- If it is clear that the taxpayer has complied and Sars is at fault, the tax ombud will send Sars a letter, outlining details of the complaint, the ombud’s findings and his recommendations.
- If a recommendation by the ombud is not accepted by Sars, there must be a reasonable explanation as to why the recommendation is unacceptable.
AUTHENTICATION OF BANKING DETAILS
1. The taxpayer notified Sars that his banking details had changed. Sars failed to authenticate and implement the new banking details before a refund was due to the taxpayer, and the refund was paid into the old bank account. The taxpayer lodged a complaint with the tax ombud and after the ombud’s intervention, Sars authenticated the banking details and rectified the payment to the taxpayer.
FAILURE TO ATTEND TO AN OBJECTION
2. A taxpayer submitted an objection to her tax assessment at the Sars branch office within the prescribed time. However, the branch office failed to forward the objection to the relevant internal Sars department in time to address the dispute. The taxpayer needed a tax clearance certificate, but was unable to obtain one while the dispute was pending. She lodged a complaint with the ombud’s office and her complaint was resolved.
A CAPTURING ERROR BY SARS
3. A taxpayer went to a Sars branch office for assistance with filing his income tax return. The Sars official incorrectly captured his income on the return. The taxpayer lodged several objections, all of which were rejected by Sars, due to the fact that they were lodged after the assessments had prescribed. He then lodged a complaint with the tax ombud and his tax assessment was corrected in terms of the provisions of tax legislation.
4. A taxpayer was incorrectly classified as a provisional taxpayer. This resulted in penalties and interest being levied for his failure to file provisional tax returns while he was, in fact, complying with legislation by filing annual returns. Once the tax ombud intervened, the taxpayer’s status was rectified, and all penalties and interest were waived.
This article first appeared on fin24.com.