SARS is done playing games
Amid a growing budget deficit that is due, in part, to strained tax collections, South Africa’s tax revenue service SARS has ramped up its collection efforts and is giving no quarter to tax dodgers.
According to tax experts at Tax Consulting SA, over the last 12 months, the revenue service has become noticeably more aggressive in pursuing demands and sending the Sheriff of the Courts or its own Asset Forfeiture Team to collect its dues.
“The days of SARS sending indebted taxpayers demand upon demand with no action are long behind us,” it said.
This new strategy is In line with the SARS 2023 Strategic Objectives, where the taxman now wastes no time in instituting collection measures against non-compliant taxpayers.
The tax experts said that in the best-case scenario, a non-compliant taxpayer may wake up one morning to find their bank balance drained – with no prior notice. In this situation, they are likely to be told by their bank that it received a ITA88 notice from SARS.
An ITA88 is a third-party appointment by SARS that the bank has no grounds to dispute. The bank will have no choice but to attach the taxpayer’s funds.
“Failure to do so would place the liability for payment of the debt on the bank, which is something no financial institute will accept, regardless of how many times you have taken your Private Banker out for lunch,” Tax Consulting said.
The same principle is followed when an employer receives a garnishee order against a taxpayer’s salary.
“The key difference here is that (with garnishee orders) only a portion of your monthly income will be deducted. By comparison, the ITA88 could deplete your life savings in a moment and literally break your bank.”
While this may sound drastic, Tax Consulting said it is clear that SARS has “reached the end of its patience with non-compliant and indebted taxpayers, who deem their tax-compliance as secondary to almost everything else in their lives”.
In light of the 2023 filing season being well underway, SARS is on the lookout for any taxpayer who fails to timeously submit their tax returns or settle a tax debt due to the fiscus.
The experts said that SARS is increasingly penalising non-compliant and well as tardy returns.
“Where there is a failure to meet the filing season deadline, SARS will have no patience for late submission, and the monthly levying of administrative penalties will commence. These are recurring penalties in the region of R250.00 per outstanding tax return per month outstanding.”
The group warned that the monthly administrative penalties can quickly rack up, especially where multiple returns are outstanding for an extended period of time. In some cases this has ballooned into the tens of thousands of rands, it said.
In addition to this, there are also under-payment penalties. Together with interest, these administrative oversights can snowball into a massive liability, the group warned.
Tax Consulting said that SARS has also become exceptionally good at sniffing out non-compliance and has eyes on every move, including those made overseas.
The experts said that SARS has been biding its time, focusing on the most prevalent debts, and working its way through each and every non-compliant taxpayer, calculating interest upon interest and imposing penalties across board.
“SARS has been consistently increasing the pressure of its collection measures, with final demands being sent to taxpayers for each and every debt owed to SARS.”
With the follow-through on non-responsiveness becoming more drastic, collection proceedings can include, but are not limited to:
- Collection of an outstanding tax debt via Third-Party Appointment, i.e., Employer, Bank, or Debtor of the taxpayer;
- Taking a civil judgement against the taxpayer, including potential credit bureau blacklisting; and
Attachment and auction of taxpayer assets to satisfy the tax debt owed to SARS.
“A word to the wise: if a final demand is received, being the start of the collection process, don’t (Stick your head in the sand). With the fiscus low on finances, SARS is aggressively and pro-actively pursuing collections, which start with the final demand,” it said.
What this is, in substance, is a formal letter demanding full payment of your tax debt within ten business days, failing which, they will proceed with quick and effective collection of the debt.
“With the increased number of civil judgments taken against taxpayers in debt to SARS, it has become clear that after the ten days have lapsed, SARS are under no obligation to notify you before acting on the threat of collection.”
The group said that anyone caught on the wrong side of SARS should engage with the service first, as first-mover advantage could see tax liabilities reduced and penalties and litigation avoided.
“As a rule of thumb, any and all correspondence received from SARS should be immediately addressed.”
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