Tax debt and what you need to know as a taxpayer

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The 2019 tax season filings for individuals has been closed by the South African Revenue Service (“SARS”). As an individual taxpayer, you may find that you owe SARS monies that you were not anticipating. Such monies could be outstanding as the consequence of administrative penalties arising on late or non-submission of income tax returns, the submission of a return without payment, partial payment of your income tax liability or debt arising from a SARS audit assessment.

Should you find yourself in a situation of unexpectedly owing SARS monies, it is useful to know what your options are in terms of how to approach SARS and deal with the funds outstanding:

Assessment

This is the first notification from SARS of funds due by the taxpayer and bears a due date by which the funds due are due to be paid to SARS. SARS follows up with courtesy reminders of the funds due, this is communicated by SMS as well as other means. Payment of the full amount outstanding by the due date provided by SARS ensures that no further interest and/or penalties are levied against the taxpayer.

Past due reminders

Once the due date has passed, SARS continues the reminder notification process, but the tax status of the taxpayer changes to “non-compliant”. This is significant for several reasons, including income tax clearance, which is cannot be provided while the taxpayer remains in that status. Should you be unable to pay the amount outstanding, remedial actions available to you include a request to SARS to defer payment, request a suspension of payment in order to lodge a dispute, or formally request SARS for a compromise.

Notice of Final Demand

Should you fail to settle the debt due to SARS without requesting any of the available remedial opportunities, SARS issues a notice of final demand. Once this step has been taken, SARS may appoint a 3^rd party to collect the outstanding funds from the taxpayer and pay it to SARS on its behalf. 3^rd Parties include the taxpayer’s employer or its banking institution. 3^rd Parties appointed by SARS are legally required to comply with SARS’ order in this regard. Additional collection mechanisms available to SARS include taking judgement against the taxpayer, blacklisting the taxpayer as well as attaching and liquidating the taxpayer’s assets.

In conclusion:

As a taxpayer, you should always ensure that your taxation liabilities due to SARS are paid on time, to avoid interest and/or penalties being raised by SARS.
Ensure that your contact details with SARS are up to date to ensure that SARS’ notifications reach you.
Should you not be in the position to pay your SARS debts on time, timeously trigger the remedial mechanisms available to you. The SARS website lists contact information for taxpayers wishing to contact them.

To ensure that you do not find yourself in a position where SARS is seeking funds from you, hiring a professional income tax consultant is strongly encouraged. The MMS Group is a SARS registered tax practitioner and in our capacity as such, we act for taxpayers committed to income tax compliance. Contact our team of tax experts if you wish to assure your compliance status with SARS.