The Office of the Tax Ombud has come under significant pressure amid budget and capacity constraints as complaints rose 62% to 3 454 during its past financial year.
Speaking at the launch of its Annual Report for the 2016/17 financial year its CEO, Advocate Eric Mkhawane, said capacity was a very serious issue. The office “battled heavily” during the period.
As a result of National Treasury’s cost containment measures, the office received budgetary increases in line with inflation, but because complaints were growing rapidly, it didn’t alleviate much of the pressure.
Mkhawane said although it made representations to Treasury it could unfortunately not secure the funding it required – leaving the office with a shortfall of roughly R6 million. A request for the additional funds was granted for the next financial year.
“We have been stretched to the limit – I must be quite honest.”
He said the office had to ask people to work additional overtime in order to cope with the demands on its services.
Tax Ombud Judge Bernard Ngoepe said the staff numbers haven’t grown in line with the volume of the work, which has increased significantly.
“We believe that we will be getting there after some time.”
Ngoepe said the office was able to cope with the volume because it employed “highly competent and skilled people”.
Asked to explain the significant spike in the number of complaints, Mkhawane said it was twofold. It could be an indication that an increasing number of people are becoming aware of its services.
“At this stage it is not very easy to tell or to say there is something wrong [or] going on within Sars. We need to reach a point where we can say now that everybody knows [about the office], is there an increase [in the number of complaints]?”
The Office of the Tax Ombud was set up in 2013 to allow taxpayers the opportunity to resolve their concerns about service, procedural and administrative matters speedily, amicably and free of charge.
Of the 2 992 cases reviewed by the office during the past financial year, 39.5% related to dispute resolution, 24.9% to refunds and 8.3% to debt. Other types of complaints collectively accounted for 27% of the total.
In September, the Tax Ombud found that the South Africa Revenue Service’s system allowed it to unduly delay the payment of verified refunds to taxpayers in certain cases. Delays with tax refunds have been an on-going issue. Ngoepe’s report included several recommendations to address the obstacles.
Asked how Sars was responding to the report, Mark Kingon, group executive for relationship management, said a number of steps had been taken.
One of the obstacles was Sars incorrectly raising assessments where there was a credit amount without due process being followed. These steps had been terminated, Kingon said.
Another issue raised in the report was refunds for one period being withheld while an audit or verification process was in progress on another period.
Kingon said during the latter part of last year, Sars implemented a change – VAT refunds were released based on individual periods without reference to any other period.
On the Income Tax side, it was a greater challenge to extract one period at a time due to technical considerations, but its IT department would be working on the issue as part of its migration to SAP.
“We hope to deal with that in due course.”
Kingon said there were also a number of incidents where taxpayers have contacted Sars because a stopper that was legitimately placed on refunds was not lifted timeously.
“We are putting steps and checks and balances in place to ensure that that is done.”
Kingon said Sars had also engaged internally to find a more proactive way of changing and validating bank details.
“It is one of our key fraud areas, where people try and divert refunds to illegitimate accounts so we do have checks and balances that do cause some legitimate taxpayers to struggle.”
He said Sars would also continue to engage with industry on how to facilitate a change in bank details in an efficient manner.
“Nothing frustrates a client [more than] having to go back again and again to rectify that.”
Ngoepe said it is important to ensure that people pay their taxes, but they also have to be treated fairly.
“We don’t like Sars to adopt a ‘skop and donder’ attitude. We want them to treat people fairly because we know that if you treat people fairly it will inculcate in them a sense of responsibility to enable them to comply with their tax duties.”
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