But outstanding tax balances seldom evaporate and SARS is now being far more proactive in its recovery.
Recently SARS has simply identified an overdue outstanding balance of tax, interest and/or penalties, and instructed the employer to recover the amount by way of a salary deduction.
In many cases the outstanding taxes relate to late or non-rendition of tax returns, for which there is now an automatic monthly penalty.
Complaining to the employer doesn’t help at all. Even if SARS is wrong, the employer has received an instruction from SARS and has to comply .
Taxpayers must understand a fundamental principle: if SARS claims an amount, the taxpayer must react promptly, even if SARS is clearly wrong. Failure to do so leaves the SARS claim payable. Telephone calls to SARS seldom help. Today there is a step-by-step process to follow:
Taxpayers must dispute incorrect assessments by filing the appropriate forms within 30 days. And even that does not dispose of the immediate liability to pay by the due date.
Payment of taxes is not automatically suspended by objection or appeal proceedings. The taxpayer must also apply for postponement of payment pending the resolution of the objection or appeal.
In most cases SARS will grant the postponement of payment, but the taxpayer must initiate the process by making an application. SARS can reject the application as a frivolous attempt to postpone the inevitable.
It is important to note that the interest clock is running from the due date of the assessment. So, if the taxpayer disputes an assessment and loses, an interest charge will follow. There is no discretion afforded to SARS to waive this interest charge even if SARS is sympathetic to the taxpayer’s case.
All of the above appears draconian. But, in practice, the system works if the taxpayer responds timeously and correctly to an assessment from SARS. The problems happen when taxpayers procrastinate in the hope that claims from SARS will mysteriously just go away.
Originally published in the Sunday Times Tax Talk column.