As Taxpayers are still grappling with the consequences of covid-19, SARS is under tremendous pressure from Government to collect tax.
SARS applies various methods to increase its collections and one such method is by appointing third parties to collect on its behalf. Section 179 of the Tax Administration Act, 2011 (TAA) empowers SARS to collect outstanding tax debts via third-party appointments such as banks, employers, pension funds, or any other person who holds or owes any money to such Taxpayer.
Tax collection through third-party appointments may result in serious difficulties for Taxpayers if they are unaware of such appointments i.e. No funds left in the bank account to pay employees and/or operational costs which may result in serious financial hardship and loss of business. As a result, the TAA makes provision to protect the rights of the Taxpayer by requiring SARS to follow certain steps prior to appointing a third party:
A letter of demand must be delivered to the taxpayer at least 10 days before issuing a notice to third parties who hold monies for and on behalf of the taxpayer concerned (Physically or electronically);
The letter of demand delivered to the taxpayer must set out the recovery steps to be taken should the tax debt not be paid; and
The letter of demand must also specify the relief mechanisms available to the Taxpayer.
It is therefore imperative for Taxpayers to ensure it has received the final demand letters either physically, to its postal address, or electronically via the taxpayers' SARS E - filing profile, should it find itself to receive such notice from a third party and/or realize that the funds are no longer available. Seeing that such appointments for collection of debt can result in serious financial hardship, it is advisable for the appointed third party to request proof from SARS that a final demand letter was provided to the Taxpayer before collecting the taxes as it often happens that the Taxpayer did not receive such notices or the debt is subject to a dispute and a request for suspension of debt was submitted to SARS which does not reflect on its system.
More importantly, Taxpayers must ensure that their registered details are regularly updated on SARS E-filing to receive communications from SARS. This can be done by updating the RAV01 form on its SARS E - Filing profile. Immediate action is then required by the Taxpayer to follow the correct procedures in terms of the TAA to ensure that third parties do not unjustifiably pay money to SARS.
VAT IT can assist Taxpayers to ensure that contact details are updated with SARS and help where such debts are in dispute.
SARS sets out the guidelines. Follow the link:
Article by: Ruan Jansen van Vuuren