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New taxpayer verification process painful, but necessary

Use of biometric information is aimed at curtailing fraud.

Taxpayers will in future have to appear in person at a branch office of the South African Revenue Service (Sars) if any of their details registered with the agency change.

In the past this verification was only necessary when the taxpayer’s banking details changed. However, they will have to visit a branch if a telephone number or an address changes.

Taxpayers will have to take their identification documents with them and will be fingerprinted and photographed in order for Sars to verify whether their records correspond with that of the Department of Home Affairs.

Des Kruger, a member of the tax legal technical work group at the South African Institute of Tax Professionals (Sait), says due to the level of fraud in the country, Sars was forced to take steps to prevent it. 

“As crazy as the verification system may be, and cumbersome, and burdensome, and painful, especially this time of the year where the queues outside the local Sars offices stretch forever, the sad fact is that there is so much fraud that Sars was compelled to do something,” says Kruger, consultant at law firm Webber Wentzel.

He adds that legislative changes allow Sars to request biometric information “if the information is required to ensure… proper identification of the (taxpayer) or counteracting identity theft or fraud”.

Kruger says Sars has a legal right to compel a taxpayer to provide fingerprints and be photographed. It should not be a major concern to meet these requirements, provided the requisite fingerprints and photo verification process does not take forever to verify.

It should also not result in an unreasonable delay in the time it takes to pay out a refund due to a taxpayer, says Kruger.

Sars says in its 2015-16 annual report approximately 1.8 million refunds amounting to R15 billion were paid out and more than 95% of refunds were paid out within 72 hours. The agency also conducted 1.8 million audits.

Willem Oberholzer, tax specialist at audit and advisory firm Nkonki, says it is understandable that Sars will want to verify any change in banking details in order to curtail fraud.

“If you consider the vast amount of money that is being refunded to taxpayers, the verification process seems like a step in the right direction,” he says.

“The only concern might be whether the Sars offices can handle the influx of taxpayers for the physical verification when taxpayers are required to present themselves in person.”

Oberholzer says direct confirmation or verification from the banks, which by law have already verified the existence of the clients, might be a less invasive form of verification.

Sait CEO Keith Engel, says Sars “frequently” audits or seeks to verify claims made on returns. Sars is distrustful of paperwork that can easily be fabricated.

The Sars system will pick-up electronic filing profiles where taxpayers repeatedly adjust certain blocks in order to improve their net outcome by eliminating amounts owing in favour of a refund. 

Sars provides rapid refunds in many cases, but its risk engine is sensitive and deviations can easily trigger an audit, says Engel.

Read more from Amanda Visser:

Foreign income change to increase cost of employment

New reporting requirements for SA financial institutions

Rise in tax disputes set to continue

Non-executive directors must charge VAT on fees

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Why don’t they get the data from AARTO who hold all valid drivers ID number, photograph and finger prints – seems SARS want to reinvent the wheel each time they change their systems

It’s a pity that were the rest of the world becomes more auto-mated, in SA we seem to attempt the clumsy & impractical.
Which HNWI is going to spend themselves 1-2h at SARS to update changes in address, or contact details? Furthermore, are taxpayers that has already emigrated or temporarily relocated elsewhere for work, now expected to fly back to SA to do this chore? (..a Power of Attorney should be an option at least)

Nevertheless, this has less to do with ensuring the correct people receive their own refund, and much more to do with SARS’ collection efforts on outstanding debt by owed taxpayers that has become difficult to trace due to stale info (to eventually attach assets in the legal process) as a result of not updating their physical details for a long time, and/or ceased submitting returns for years.

OK, one accepts that everyone must pay their “fair” share for the betterment of all citizens, but surely there are better ways to sync with commercial bank’s existing databases (FICA) and cellphone ISP’s (RICA), unless this is again a legal/privacy issue(?)

Probably just another job creation scheme.

Or, is it another facility for ‘Big Brother’ to gain access to our private information?

Fat lot of good the biometrics will do when most of the money is stolen or defrauded by inhouse government officials in schemes and scams that make Hollywood look like a Sunday school picnic.

“Sars provides rapid refunds in many cases”

LOLLOLand LOL again. Total krep.

1.8 million refunds and 1.8 million audits – does this mean that the minute you’re entitled to a refund you are automatically subjected to a tax audit? I wonder why?

Is this true? I can’t seem to find supporting sources anywhere?

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