SARS agents lurk amongst us
Oupa Magashula (the Commissioner) recently released a statement that the South African Revenue Service (“SARS”) will get tough on tax offenders owing money to the taxman. He intends taking money they owe the taxman out of their bank accounts and by attaching their salaries. This has caused concern amongst taxpayers. This article helps to answer whether SARS has the authority to do this?
SARS has the authority to recover taxes using various methods. The most common method is via the employer or via the taxpayer’s bank account. For years, SARS has recovered taxes from employees by requesting that employers’ withhold the requisite amount and pay it to SARS prior to paying the employee. This was done via a so called “garnishee order”. Employers were obliged to comply, irrespective of objections from the employee.
An increasingly common method of recovering taxes at the moment is via the taxpayer’s bank account. Effectively, SARS appoints the bank as its agent to recover any monies due to it, by recovering the money from the taxpayer’s account. These places a burden on any person appointed as an “agent”. SARS has remedies available against an un-cooperative “agent”, as it does against the taxpayer. In other words, SARS has the ability to recover the monies directly from the agent, if the agent does not comply with its request.
At what stage will SARS adopt this route, because surely it must be an action of “last resort”? There are unfortunately no clear guidelines available to the public in this respect. Logically, these must be methods of last resort.
Communication via mail is not always successful, especially bearing in mind that the taxpayer may have changed his/her address and may not have received the notification from SARS that he/she owes money. It is, therefore, important that SARS contact the taxpayer via telephone in order to communicate that there is a liability due, and make appropriate arrangements for payment. It is important that the taxpayer receive proof that the money is due, as there are quite a few telephone scams out there.
In some instances, where taxpayers do receive these phone calls requesting payment, SARS must ensure that the taxpayer is given sufficient time in order to make the payment. At the end of the day communication around the issue is important. SARS needs to lay out the rules relating to when it will invoke the mechanism of appointing an agent, as well as creating a mechanism for the staggered payment of the outstanding tax over a period of time.
There are further complications around this aspect which would need to be investigated, in particular the relationship between the client and the bank. One could argue that in instances where a bank has been instructed to act as agent and withdraw the funds from the individual’s bank account, it should notify the client of this instruction from SARS. At the end of the day, there is legislation in terms of which SARS can appoint an agent and instruct such agent to recover any tax, interest or penalty due from moneys held under its custody. Whether or not such legislation is a contravention of individuals right to privacy is a question for another day.
