A chance for the little guy against SARS

I ALWAYS chuckle when I hear taxpayers wanting "to take up the matter with the minister of finance". They get hacked off when I say: "You're barking up the wrong tree."

The president appoints a minister of finance who works with National Treasury in formulating tax rates, policy and acts that are then promulgated by parliament. That”s as far as the position goes. It is up to the SA Revenue Service and the commissioner to enforce the tax laws.

Many taxpayers incorrectly assume that the SARS commissioner is appointed by and accountable to the minister of finance. No, the commissioner is appointed by the president.

The distinction is important when it comes to the appointment of the tax ombud in terms of the new Tax Administration Act. Just the word “ombud” conjures up images of a consumer protector who will strike down SARS assessments and deal with overzealous tax inspectors.

No such luck. The tax ombud will be appointed by and report to the minister of finance, and will have no powers to strike down anything done by SARS. The ombud merely monitors SARS and reports back to the minister of finance.

The tax ombud”s reports could result in refinement, or even new legislation, down the track. Cold comfort to aggrieved taxpayers today.

I like the principle that there is a clearly defined sequence of steps for a wronged taxpayer to follow. Permitting interference at any level always leads to inconsistent outcomes.

The aggrieved taxpayer has remedies that run all the way to the highest courts in the land. But can taxpayers afford legal representation, which can cost millions?

Tax disputes below R500000 can be referred to the special board of appeal. This is cheaper, but the outcome may not be binding on SARS.

So, on paper, there seems to be a hole in the defences available for the smaller taxpayer with insufficient resources to slug it out with SARS.

Maybe not. Alternative dispute-resolution procedures generally remove the bull from disputes by creating a SARS panel to examine matters. And SARS is given the power to settle on a realistic basis with the taxpayer. It is a far cheaper alternative to litigation.

I would far rather try to settle a tax dispute through an alternative dispute- resolution procedure than have an ombud interfering in the matter.

Originally published in the Sunday Times Tax Talk column.

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