With the tax filing season for individuals now closed, taxpayers may find themselves with tax debt that is due. This may be due to administrative penalties as a result of the non-submission of tax returns, the submission of a return without payment, only partial payment or debt arising from an audit assessment.
The South African Revenue Service (“SARS”) provides assistance to taxpayers in managing their tax debt. As an initial phase, SARS will remind taxpayers of the amount of tax due before the due date. This is done by way of an assessment with the relevant due date indicated thereon as well as courtesy notifications from SARS which acts as reminders to pay the outstanding amount. Paying the full outstanding tax debt at this point will ensure that no interest and penalties are levied against the taxpayer.
Once the due date has past and the debt remains outstanding, the taxpayer’ tax compliance status will change to “non-compliant”. SARS will, however, continue to send reminder notifications to the taxpayer to settle the debt.
At this point, it is important to note that the taxpayer may at any point request for remedial actions which could include a request to defer payment, the suspension of payment with the intention to lodge a dispute or to request a compromise.
Should taxpayers fail to settle the debt without requesting any of the remedial mechanisms, a notice of final demand will be issued. SARS may now appoint a third party who holds money on the taxpayer’s behalf to deduct the tax debt and to pay it over to SARS. For example, an employer or bank may be requested to deduct the debt from the taxpayer’s salary. Such a third party is legally obliged to act on behalf of SARS.
SARS also have other collection tools available to ensure all tax debts are paid. These include issuing a judgement against the taxpayer and having the taxpayer blacklisted as well as attaching and selling the taxpayer’s assets.
The take away is that taxpayers should ensure that all relevant tax debts are paid timeously to avoid interest and penalties being levied. Also, taxpayers should regularly update their contact details with SARS to ensure that they receive all relevant tax correspondence.
However, should taxpayers not be able to pay their tax debts in time or need assistance in managing their tax debts, they should contact SARS to request any of the remedial mechanisms. SARS’ website lists a number of contact details for taxpayers to engage with SARS on these matters depending on their location. Taxpayers could also contact their tax advisors or tax practitioners to assist them in making contact with SARS in order to settle all outstanding tax debts.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)