The recent Tax Indaba, attended mainly by tax professionals, included a panel discussion on ‘The taxpayer versus the tax practitioner versus Sars’. While many believe that if taxpayers are treated fairly they will pay their taxes as required, Sars is of the view that not all taxpayers are playing the game and aren’t filing tax returns on time, nor paying their tax debts.
What is nonetheless clearly evident is that the Office of the Tax Ombud (OTO) is making its mark. A growing institution, with somewhat stunted powers, the OTO is playing a vital role in ensuring that taxpayers are treated fairly. The Tax Ombud, Judge Bernard Ngoepe, would like to see the OTO as an independent institution with more powers, and with its own budget. Ngoepe also mentioned the necessity for a taxpayers’ Bill of Rights, and is of the opinion that all Sars staff interacting with taxpayers should belong to one of the professional bodies. I am sure most taxpayers will support this.
Essentially, the OTO, acting impartially and independently, is dedicated to resolving taxpayers’ complaints against Sars. The OTO has noted that Sars is continuing with the practices it was supposed to cease (such as withholding refunds from one period due to another period). Most complaints received by the OTO relate to dispute resolution and delayed refunds.
The complaints forwarded to the Tax Ombud must relate to a service or administrative or procedural issue by Sars. Generally, a taxpayer may only approach the OTO after they have exhausted all the Sars internal remedies available under the Tax Administration Act (TAA).
Sars’s internal remedies
- A complaint to Sars may be lodged on the eFiling system, and Sars has issued a step-by-step guide on how to do this. However: “the complaint form is not available for download or for printing and posting to you. It is an online form only available for you to complete on eFiling or it will be completed on your behalf by a Sars agent when you contact the CMO [Complaints Management Office], Contact Centre, a branch or a Mobile Tax Unit.”
- An alternative step is to visit your nearest Sars branch. This isn’t a 30-minute exercise, and will no doubt cost the average employee at least a day’s leave. The branch may not solve the problem. I know of someone who twice had to visit a branch for them to scan and load documents onto the eFiling system, and they did not manage to get this right. Furthermore, visiting a branch during working hours is impossible for many. This is also a huge problem for taxpayers who are elderly, bedridden, or who live far from a branch.
- Lastly, a call may be made to the Sars CMO on 0860 12 12 16.
A disagreement with an assessment must be objected to, in writing, or the taxpayer may follow the dispute resolution process. It is suggested that in such a case, the assistance of a tax practitioner should be engaged.
Many taxpayers are of the view that Sars’s internal remedy process does not work. The frustrated taxpayer is blocked by inertia, unavailability of staff, a long wait for a response, and officials not being able to make or take a decision.
Contacting the Tax Ombud directly
A taxpayer may contact the Tax Ombud directly when there are compelling reasons to do so. One such reason would be a systemic issue. To encourage taxpayers to make use of this short circuit, the Tax Ombud has issued a guide on defined systemic issues (the full list is available on www.taxombud.gov.za).
Systemic issues include: delays in payment of refunds due to ‘special stoppers’ (a mechanism intended to protect taxpayer accounts from abuse where a high fraud risk is believed to exist); instances where the filing of a new return delays the payment of a refund for an earlier period (for example, a delay in filing for 2017 may affect a refund due for 2016); a refund due for one period and an audit/verification being done for another; victims of identity theft; Sars not keeping to the timelines; problems caused by deficiencies within the Sars tax compliance system (TCS); discrepancies within the Sars statement of account (SOA) system; repeated follow ups and requests for more documentation by Sars; incorrect invalidations of the appeal notice by Sars; Sars not issuing a notice of assessment, and so on.
The comments from the floor indicated that taxpayers are still battling with these systemic issues, with Sars’s practice of using special stoppers to hold back refunds and never-ending audits continuing.
So far the recommendations made by the OTO are not binding. However, Sars will now be compelled to give reasons for not following its recommendations.
The OTO is a growing force, and has already submitted requests for two systemic investigations to the Minister of Finance. These investigations will address the root causes of problems and the symptoms of procedural and administration issues. All is not lost – we can look forward to some improvements in taxpayers’ rights.