“… the OTO commits to continue doing everything possible to ensure that taxpayers are not forced to pay a cent more than what is required.” (Judge Bernard Makgabo Ngoepe, the Tax Ombud)
The list of the top 10 complaints made against SARS over the last eight years to the Office of the Tax Ombud (OTO), published in its recent newsletter, makes for interesting reading, and highlights the areas where taxpayers are most likely to encounter pitfalls in their dealings with SARS.
The Top 10 complaints made against SARS
- SARS placing unwarranted stoppers on taxpayers’ accounts for refunds not to be paid, significantly impacting the taxpayer’s cash flow.
- Delays in finalising verifications result in delays in releasing refunds due; even when taxpayers have submitted all the requested information.
- Non-adherence by SARS in finalising dispute resolution within the dispute resolution timelines – already an identified systemic issue.
- Incorrect allocation of payments, often first covering administrative penalties before principal debt and ignoring taxpayers’ letters to SARS about how to allocate the payments.
- Taxpayers do not receive outcomes of their objections, and in some instances, SARS could not prove that they had sent the outcomes to the taxpayer.
- Recalled refunds where SARS pays refunds into taxpayers’ bank accounts and then recalls these refunds, in some instances taking more than six months to resolve the issues.
- E-filing profile problems for tax practitioners, resulting in them not being able to add or remove clients from their profiles.
- SARS deducting more money from taxpayers’ bank accounts than it should, prejudicing the taxpayer financially.
- Banking details of taxpayers have been updated, but the refunds are still not released.
- SARS Complaints Management Office (CMO) incorrectly rejects taxpayers’ complaints lodged with it.
Source: OTO Fair Play Issue 22
The Ombud has also launched a new taxpayer rights awareness campaign, #TaxpayersRightsMatter, to help improve taxpayers’ understanding of their rights and the recourse available if their rights are not upheld by SARS.
What are your rights as a taxpayer?
Issues with refunds feature quite prominently on the list of complaints, as do delays and ignored requests or complaints. These certainly constitute infringements of taxpayers’ rights, when considering the brief overview below of the rights related to these complaints.
The interaction between SARS and taxpayers is governed by the TAA (Tax Administration Act), and SARS’ Service Charter also stipulates service levels and time frames.
The TAA, like all laws in South Africa, is also subject to the Constitution and the Rule of Law. Conduct inconsistent with the Constitution is invalid and illegal.
Some key features and principles of the Constitution are included in other Acts such as the TAA, PAIA (Promotion of Access to Information Act) and PAJA (Promotion of Administrative Justice Act).
- Taxpayers’ Constitutional Rights
- The right to privacy includes the right not to have your person, home or property searched; your possessions seized; or the privacy of your communications infringed. SARS cannot search or seize in violation of this Constitutional right.
- The right not to incriminate yourself – there are Constitutional restrictions on the information SARS can use to determine your taxes and potential penalties.
- The right to a high standard of professional ethics as well as rational and accountable actions from SARS; services provided impartially, fairly, equitably and without bias; transparency; and accessible and accurate information.
- Taxpayers’ Legal Rights
- The TAA details many taxpayers’ rights including, for example, SARS must keep taxpayers informed at all times, including providing a Letter of Findings before issuing a revised assessment.
- PAIA provides the right of access to information, detailing rules regarding how SARS is allowed to obtain information and ensuring taxpayers can find out what information SARS has accessed.
- PAJA protects the right to just administrative action, requiring that any action by SARS must be lawful, reasonable and procedurally fair.
- Taxpayers’ Rights as per SARS’ Service Charter
- Where a current year’s refund is due to a taxpayer and no other debt is due; all obligations have been met; SARS administrative control processes are adhered to; and no inspection, verification or audit is required or has been initiated; SARS will endeavour to pay the current filing period refunds within 7 business days of finalising the final assessment.
- SARS endeavours to provide reasons for an assessment within 45 business days; to consider objections within 60 business days; and to respond to service complaints within 21 business days.
How to protect your personal and business rights
- Careful compliance and excellent record-keeping are always the first line of defense when it comes to dealing with SARS. An annual tax audit by a professional will help ensure that you have the correct processes in place to ensure both.
- SARS’ Service Charter stipulates service levels and time frames with regards to returns and declarations; inspections, audits and verifications; refunds; payments; debt and disputes; and provides official channels for complaints. Understanding these can help you protect your rights as a taxpayer.
- Private and business taxpayers have free and independent recourse against SARS through the OTO. However, the powers of the OTO are very limited. It can only deal with complaints against SARS that relate to a service, administrative or procedural issue and only after all avenues of recourse within SARS have been exhausted, except where there are compelling circumstances or the matter is a systemic issue. For example, the Tax Ombud has no control over how long SARS will take to implement its recommendations, which are also not binding on either SARS or the taxpayer.
- Access to an expert who can defend you or your business in the event of a tax dispute is essential.
- If taxpayers are uncertain of their rights or if their rights are being infringed, they must seek expert advice to protect their Constitutional and legal rights.
- A long list of High Court cases against SARS reveals a growing trend of taxpayers seeking legal recourse against procedurally unfair conduct by SARS or administrative decisions by SARS that prejudice the taxpayer’s rights. The cost of legal defense is often prohibitive, making tax risk insurance worth considering to ensure access to experts in constitutional and tax law when required.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.