If the South African Revenue Service (SARS) had decided that you owe tax, but you know or fear you are unable to pay it immediately, don't just try to ignore your problem. Rather appeal to the tax authority for debt relief.
Whatever the reason for your tax debt, whether it is a change in your financial situation due to a job loss or a business failure, or perhaps a smaller debt to SARS ballooning after attracting penalties and interest, ignoring the problem will only make things worse.
SARS’s stated objective is to make non-compliance “hard and costly for taxpayers who are unwilling to comply”. But another key objective is to “make compliance easy, and sometimes seamless for taxpayers wishing to comply”.
You should therefore not wait until SARS sends you a letter of demand, but should rather approach the tax authority with details of your financial difficulty and actively seek a solution. It is in everyone’s best interest for a payment arrangement to be reached.
SARS offers a number of debt relief mechanisms.
You can request a payment arrangement or instalment payment of your outstanding debt through the eFiling system or by calling the SARS call centre.
Before SARS will enter into such an arrangement with you, however, you must file all your outstanding returns.
If you agree that you owe the tax, but can't afford to pay it you can enter into negotiations with SARS to have any interest and penalties as well as potentially a portion of the capital amount written off. In terms of the agreement, you must agree to settle the balance.
To qualify for this debt relief, you must approach SARS and submit evidence of your situation and the need for relief.
If you disagree with the amount SARS says you owe, you can lodge a dispute through eFiling. A dispute should ideally be brought to SARS’ attention timeously - before SARS has issued a final notice for the outstanding debt.
Disputes are heard by an independent debt committee at SARS, which is guided by the law as well as the rules of the organisation. The committee does have some discretion.
Remember, the tax ombud can only hear complaints about how SARS administers tax legislation – it cannot hear disputes about the interpretation of the law. To contact the tax ombud see: SmartAboutMoney - where to complain
