Taxpayers who want to fight with the South African Revenue Service (Sars) must “exhaust” all of their internal reporting mechanisms before they can turn to any other body for help in their fight.
Too often, taxpayers view the Office of the Tax Defender (OTO) as their first port of call when they want quick solutions to their Sars problems, primarily in an effort to save time and money.
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The rejection of a recent complaint by the Tax Defender highlights the fact that the taxpayer must first exhaust all Sars processes. In this case, the taxpayer’s representative approached the Ombudsman’s Office when Sars did not issue a document requested by the taxpayer. The Tax Defender determined that he did not exhaust all of his options and also rejected his appeal.
Daniel van Tonder, chief tax officer for FinSolve Accounting and Taxation, says there is no “fixed checklist” showing when all mechanisms have been exhausted.
Fail the taxpayer
“Sold out is a relative term.” It’s when taxpayers feel like the system has failed them, says Van Tonder. They cannot go backwards or forwards.
“Only when you find yourself between a rock and a hard place, can you approach the Tax Defender,” he said during a South African Tax Institute (Sait) webinar on escalation of cases to the OTO.
Van Tonder says that it is quite an overwhelming process to participate in a dispute or objection process with Sars and most people prefer to approach the Tax Defender for a quick resolution.
Sait’s technical tax consultant, Yolisa Dyasi, says it is important for taxpayers to understand that they can use the Tax Defender’s Office to escalate cases where processes were not followed or response times were not met.
“Taxpayers and tax professionals should familiarize themselves with the difference between escalation processes and the dispute resolution process. Mixing the two processes can cost taxpayers time and, in some cases, money. ”
She says that recognized watchdogs like Sait could also help practitioners escalate issues, even when Sars’s internal complaint mechanisms have not been exhausted.
Van Tonder says that when engaging in a dispute or objection with Sars, it is critical to build a solid timeline in terms of all commitments to Sars, including the date of the initial objection letter, response times, comments, or lack of feedback and the results of any engagement with Sars.
This will be important when the taxpayer approaches the OTO. In the case where the OTO rejected the taxpayer’s complaint, his doctor claimed that he had filed a complaint with the Sars Complaints Management Office.
However, the OTO could not find evidence of such a claim. “It is important to note that the OTO has access to the Sars complaints system and can independently verify the information provided by the taxpayer and the revenue collector,” said the Tax Defender in his case alert.
Play by the rules
Van Tonder advises taxpayers not to start on the back foot when they have a valid objection. It is important to be attentive to the rules of the game, as the OTO will consider not only the conduct of the Sars, but also the taxpayer.
In many cases, taxpayers feel that the Sars has all the power and that there is little they can do to protect their rights.
The most common reason that taxpayers complain about Sars is because deductible expenses are not allowed.
This includes contributions to medical assistance or retirement annuity or expenses incurred for business purposes and in the production of income. Another common complaint is delays in paying legitimate refunds.
The OTO previously found that delays in the payment of legitimate refunds were a systemic problem. In terms of the Tax Administration Law, the Ombud can consider a complaint without the taxpayer having to exhaust all the Sars processes if there are “compelling circumstances”.
The law establishes that compelling circumstances exist if the request raises systemic problems, if the exhaustion of the complaint resolution mechanisms will cause undue hardship to the taxpayer, or if the exhaustion of the complaint resolution mechanisms is unlikely to produce a result within a period of time. of time that the Fiscal Defender. considers reasonable.
Read: Tax Ombud launches #TaxpayersRightsMatter campaign
Van Tonder says the Tax Defender will consider each case on its own merits. If you check all the boxes, or there are compelling circumstances to escalate your case, be clear about the reason for the complaint, show how you have engaged with Sars, and indicate what outcome you require from the OTO, he advises.
It also advises taxpayers to include the results of previous cases or objections in the complaint to the Tax Defender.
“Case numbers and timelines will make or break your case.”