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SARS explains refund delays and extra admin for irate taxpayers

07 October 2016   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (BDlive)

Taxpayers' anger and frustration with the South African Revenue Service (SARS) due to its decision to withhold refunds, even legitimate ones, is growing.

While the Office of the Tax Ombud has apparently received only “a few complaints”, the controlling bodies of tax practitioners have issued statements emphasizing grave concerns about the apparent lack of procedural fairness.

SARS said it became aware of “a number of cases” where criminal activity resulted in profiles being “maliciously” used and bank details being changed. This was detected “during the early phases” of the 2016 filing season, which started in July.

This resulted in refunds being withheld.

The South African Institute of Chartered Accountants (Saica) says taxpayers’ frustration stems from “deferral procedures” that do not seem to adhere to standard procedures.

This has resulted in multiple requests for verification documents, journals being passed to negate refunds, multiple requests for bank detail confirmations, and refunds being withheld for audits on other tax matters.

“As these matters are seemingly not in accordance with standard procedure, it complicates members’ ability to use the remedies available in law,” Saica says.

It issued a statement to practitioners at the start of September, saying it was aware of the challenges they “may have” experienced because of the withholding of refunds.

The South African Institute of Tax Professionals (SAIT) says it has been inundated with complaints from members.

“Setting aside the various rumours giving rise to the problem, taxpayers are being required to re-verify details that have long existed on the system,” the institute says.

“This verification must be performed directly by the taxpayer, with tax practitioners being forced to the sidelines. Verification must often be repeated while refunds remain continually stuck in the system.”

A tax practitioner at a large accounting firm in Johannesburg, who asked not to be named, said the firm had been swamped by clients experiencing problems with refunds. These included small businesses whose VAT refunds were withheld and individuals whose banking or personal details had not changed in more than a decade.

“I think if the state is borrowing money from taxpayers, which is what it actually amounts to, then it should be brought into the open,” SAIT says.

SARS said in its statement that there had been unintended consequence of the stopped refunds, including legitimate refunds being held back in certain instances.

“Whilst it is understood that taxpayers have been inconvenienced with the process, SARS had to proceed accordingly in order to prevent possible fraud,” it said.

However, frustration has been mounting as taxpayers have had to submit the same information multiple times.

Questions posed to SARS regarding the extent of the criminal activities, the subsequent apprehension of the criminals and the average turnaround time for payments to taxpayers with legitimate refunds remained unanswered.

Eric Mkhawane, CEO of the Tax Ombud Office, said the office had been interacting with SARS. Some matters had been resolved, whilst others were still in the process of being attended to, depending on the nature of each case.

“Based on our interaction with SARS, our office is, for its part, doing its best to ensure fairness,” Mkhawane said.

SARS explains

By Thursday, SARS had not responded to questions posed to it on Tuesday. However, it responded after the article was published.

SARS said of the 3.5-million personal income tax returns received during this tax season, 5% were identified for verification of personal details.

“We are now left with approximately 50,000 returns that require verification of personal details. These remaining taxpayers have been notified to visit their nearest branch to verify their personal details in person.”

SARS said it uses third-party data to verify taxpayer details. When it detects mismatches in information between the third-party data and the information submitted to SARS, taxpayers have to do the verification in person.

“Fraudulent activity is sometimes the work of criminal syndicates and sometimes individuals. SARS has launched investigations into these activities and intercepted potential incorrect payouts.”

Once a mismatch has been detected and a return has been flagged, if a refund is due it will be paid once all outstanding requirements have been met by the taxpayer, SARS said.

“It is imperative that SARS ensures that the correct refund goes to the correct taxpayer to prevent potential losses to both the taxpayer and the fiscus,” it said.

SARS said 94.33% of the non-flagged refunds were paid within 72 hours.

This article first appeared on businesslive.co.za.


WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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