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Sars incorrectly recalls refund from a taxpayer’s bank account

And is unable to say why.
The taxpayer eventually received their refund, but only after the Office of the Tax Ombud intervened. Image: Shutterstock

As the South African Revenue Service (Sars) replaces warm bodies with technology, taxpayer frustration grows.

Gert van Heerden, senior manager of legal services at the Office of the Tax Ombud (OTO), in a discussion with Moneyweb, said there has been a breakdown of proper communication between Sars and taxpayers.

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The OTO recently came to a taxpayer’s assistance after Sars had paid a refund to a taxpayer, then immediately recalled it from the taxpayer’s bank account.

The taxpayer had submitted an income tax return for the 2018 tax year. A refund of approximately R13 000 was due to the taxpayer. Sars issued a verification letter requesting the taxpayer to submit supporting documents for the 2018 tax year. After considering the documents provided by the taxpayer, Sars raised an assessment to disallow tax credits. This resulted in a tax debt due to Sars. After the taxpayer successfully disputed the assessment, Sars revised the assessment to reinstate the original refund.

However, two months after the dispute was finalised and the assessment revised, the taxpayer complained to the OTO because they could still not access their refund.

The OTO found that on 10 separate instances over a two-week period, Sars paid the refund into the taxpayer’s bank account and then immediately recalled it.

At no stage did Sars provide reasons for the actions it took, and neither could the OTO find any legal or reasonable basis for Sars’s actions.

The OTO accepted the case from the taxpayer on the basis that Sars had incorrectly recalled the refund from the taxpayer‘s account.

The OTO recommended that Sars pay the taxpayer the income tax refund for the 2018 tax year without further delay. Alternatively, Sars should provide valid reasons for refusing to do so.

After the OTO’s intervention, Sars eventually paid the refund to the taxpayer.

How to get the OTO’s assistance

The OTO has demonstrated that sometimes lodging a formal complaint with the OTO is the only solution for taxpayers to have their tax affairs fairly addressed by Sars.

The taxpayer must however first follow the correct process to have the complaint addressed by Sars.

The complaint can be made on eFiling, and the taxpayer will be given a case number. The taxpayer should not make the same complaint twice.

If Sars does not address the complaint, the taxpayer can then revert to the OTO.

Verification of tax return details

In scraping the barrel for low hanging fruit, Sars has increased its verification of supporting documents to confirm the details submitted by a taxpayer on their tax return, particularly if the taxpayer is due a refund.

The taxpayer will receive an email: “Dear Taxpayer, An important notification has been issued and is attached to this mail. Please respond or act as stated on the letter.” Even though this might look like a phishing email, the attachment will state that supporting documentation must be submitted.

Verification letters are issued by a computer and will not have been tailored according to the taxpayer’s information.

Hence, a taxpayer may be requested to submit a retirement annuity (RA) certificate even if they have not claimed an RA deduction.

The taxpayer is also instructed to furnish the “original” of this letter with the supporting documents. Sars does not explain how to obtain the “original”. Practically, all the taxpayer can do is to print this letter, and scan it with the supporting documents, and load that file to the eFiling account.

But from here on, the taxpayer may experience delays.

The verification of the documents might not be finalised within 21 days. Once the verification is finalised, the refund may not be accessible. Even though the tax assessment reflects a credit, and the verification has been finalised, there might be no communication from Sars.

Contacting Sars for a status update

The Sars Call Centre now offers a menu of limited options. You may be able to access a voice message stating that the verification exercise has been completed, but no information on the refunds.

Taxpayers’ eFiling accounts now have a virtual assistant in dire need of training.

If you request a verification status, you will receive a message: “An unexpected error has occurred. We apologise for the inconvenience!”

Van Heerden said tax practitioners have alleged that they can wait for hours to have a call answered and, once answered, it will be deliberately dropped by the person taking it.

Moneyweb received the following remarks from tax practitioners

  • Many objections are rejected by Sars without giving sufficient basis for the disallowance (as required in terms of Section 106(5) of the Tax Administration Act).
  • Sars needs to be pulled up on its treatment of many taxpayers who are compliant or striving to be.
  • When taxpayers have been badly treated by Sars, do they ever receive a letter of apology from Sars? Are officials concerned ever reprimanded?

Van Heerden is of the view that 90% of taxpayer complaints could be avoided if taxpayers were able to have a discussion with the tax official dealing with their matter. Taxpayer education is also essential, “and Sars should be mandated to do this”.

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Every entity is currently “rent seeking”. Clawing in revenue through dodgy means – Municipalities and SOE’s like Eskom are billing incorrectly and claiming “interest” for unpaid accounts on what appears to be “arrears” but are unwilling or unable to explain or rectify their actions. Things must be so bad for them to be robbing the tax and rate payer at source quite openly now….that to me is more concerning than the theft and pillage that went before.

SARS is overstepping in many cases and they are no consequences to them or the officials that overstep.

SARS is also bitting more than it can chew. The requests for verification and audits do not match their capacity and resources. This is unfair to the taxpayers who are trying hard to be compliant.

End of comments.

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