Trouble for SARS over eFiling fraud
The Office of the Tax Ombud (OTO) says it will be launching a review of possible “systemic and emerging issues” at SARS related to eFiling profile hijacking.
SARS reported a rise in eFiling profile hijacking earlier in 2024, which involves criminals gaining access to taxpayers’ profiles through various methods.
Details are usually gained through vishing and other social engineering attacks, and the hijackers then gain control of profiles, changing banking details, creating other profiles and redirecting tax refunds.
The hijackers’ objectives are to redirect tax refunds to fraudulent bank accounts, which they set up specifically for this purpose.
In dealing with these attacks, SARS noted that incidents are escalated to its Cybercrime Task Team (CCTT) via an “internal Remedy Incident Management process”, after which, each case is then actively investigated by various specialised teams to rectify the matter and return the profile to the rightful owner.
SARS Criminal Investigations and the SARS Anti-Corruption Unit also pursue these matters.
“This involves, amongst others, engaging with banks to close accounts that were opened fraudulently and to reverse refund payments made into these accounts,” it said.
However, the tax ombudsman said in June that the full chain of events with these hijacking incidents needs to be reviewed, given the number of complaints it has received, the slow progress with resolving the problem, and the fact that the problem extends back to 2021.
The OTO said in June that SARS is an institution that should garner a high degree of trust, but the fact that its security protocols can be bypassed with such speed and ease raises serious questions.
SARS has previously refuted any indications that its staff could be involved with these activities.
Review incoming
The ombud has now announced that it has obtained approval from the Minister of Finance to conduct a review into the matter, which will focus on whether the revenue service is assisting taxpayers timeously in terms of section 16(1)(b) of the Tax Administration Act 28 of 2011.
The ombud said it was pushed to launch the review after it received complaints and queries related to profile hijacking from taxpayers and industry bodies.
“Both SARS and external stakeholders, including industry bodies, have already been notified,” the ombud said.
“In conducting the review, the Office of the Tax Ombud will engage SARS, concerned taxpayers, and/or their representatives, including their relevant industry bodies. Thereafter, a report on the review containing recommendations will be submitted to the Minister,” it said.
The tax ombud said that a systemic issue is a particular matter that can be regarded as the underlying cause of a complaint that affects or will affect many taxpayers in the tax system.
“Systemic issues may have to do with the way specific SARS systems function, how it drafts and implements policies, practises or procedures, or even how it applies or disregards legislative provisions.”
“A systemic investigation arises when an issue is identified that may impact many taxpayers or a segment of the population.
“Our office conducts reviews of the individual service complaints and telephone calls received to identify possible trends.”
The Tax ombud is required to obtain permission from the Minister of Finance before investigating issues identified as systemic, if it relates to an area that is not raised in a formal complaint.
Broadly, the ombud considers various factors when considering whether issues that taxpayers encounter are systemic, such as the impact on taxpayer rights; the negative impact on SARS; the seriousness of the issue; and the number of taxpayers affected.
After assessing these factors, the OTO then makes a formal recommendation to the Minister.
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