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income tax
With tax compliance increasingly in the spotlight since the 2022 income tax season opened, those taxpayers with outstanding debts due to SARS will experience aggressive collection steps to recover that debt. These steps range from withdrawals from taxpayer bank accounts, garnishee orders against salaries and threatening personal liability of company representatives.

If you find yourself in this position, it is important to know and understand your rights as a taxpayer and to be aware of the steps that are available to you. A SARS letter of demand is generally the first step in the recovery process.

What happens when SARS sets its sights on you?

If you should find yourself on the receiving end of a SARS letter of demand or third-party appointment against you, it is vital that you not ignore this development. Ignoring SARS will lead to the commencement of collection procedures under the Tax Administrative Act (TAA) against you, leaving you with little recourse.

A third-party appointment is not a SARS official collecting debt, but SARS legally appointing a third party under S179 of the TAA. Such third parties could include the taxpayer’s banking institution or employer, which can be ordered by SARS to immediately withhold and pay over to SARS all available funds as stipulated in the notice of third-party appointment.

A third party appointed by SARS under S179 is legally required to comply with the SARS order, failing which they can be held personally liable to SARS and subject to criminal prosecution.

What to do if you are in this position

It is vitally important to engage the services of an income tax professional to assist you should you find yourself in such a situation. Your income tax consultant will ensure that the legal process is correctly followed in addressing the alleged tax debt due to SARS.

The MMS team of tax professionals is familiar with the administration of SARS matters and looks forward to assisting our clients with their tax compliance matters. For advice on your income tax matters, reach out to your MMS lead, or contact us for assistance.