Taxpayer money unfairly taken

The Office of the Tax Ombud (OTO) recently shared a case study, in which intervention by the OTO led to SARS refunding close to R196 000 to a taxpayer, after the money was unfairly taken from its bank accounts.

An interesting read for our readers, in terms of protecting the rights of a taxpayer and securing the return of funds wrongly deducted from its bank accounts.

The tax complaint

The complaint relates to a request for SARS to delink a company from a payroll tax number as the company concerned had not registered for Pay As You Earn (PAYE), Unemployment Insurance Fund (UIF) and Skills Development Levy (SDL).

SARS had registered the company for PAYE on the wrong company registration number and incorrectly collected R195 365 from the taxpayer. The company did not have to register for PAYE, UIF and SDL because it did not have any employees.

The findings

Upon investigation, the OTO discovered that SARS had allocated the wrong PAYE number to the company. The number was linked to a different entity. Nevertheless, SARS issued Third Party Appointment (TPA) notifications to Nedbank and Investec and recovered R77 356 and R118 000 from the taxpayer’s bank accounts on 24 February 2020 and 4 March 2020, respectively.

On 2 November 2020, the taxpayer lodged a complaint with the SARS Complaints Management Office (CMO), but the complaint was rejected. The CMO rejected the complaint as it was within the service level agreement. The CMO calculated the turnaround time of 21 business days from a submission made by the taxpayer on 16 October 2020, whereas this matter had been ongoing for some time. The taxpayer had already raised the issue with SARS Debt Management from 25 February 2020.

The revenue collector issued a Notice of Final Demand on 18 September 2020 for an overdue amount of R86 529. This was over and above the two amounts it had already collected in February and March 2020. This Notice of Final Demand was issued after the collection of the above-mentioned amounts, SARS intended to proceed with further collection steps.

Recommendations and resolution

The OTO recommended that SARS delinks the company from the wrong payroll tax number as the company has not registered for PAYE, UIF and SDL. Furthermore, it should reimburse the company for the R77 356 and R118 000 taken, and cease collecting money from the wrong account or alternatively provide valid reasons for continuing to do so.

What was the outcome? SARS delinked the company from the incorrect payroll tax number on 6 January 2021 and fully reimbursed the company for the R77 356 and R118 000 taken from the two bank accounts.

An important lesson

According to the OTO, in many instances, taxpayers and business are hesitant to lodge complaints with SARS or with the Tax Ombud for fear of reprisals from the revenue collector. Others argue that the Tax Ombud has no powers to take on SARS. This matter, according to the OTO, illustrates that the OTO has powers, and that the revenue collector makes mistakes and that seeking assistance from the Tax Ombud can compel SARS to correct the errors and return monies illegally collected from taxpayers, sometimes with interest.

Concern about the possibility of being targeted by SARS for lodging a complaint is unfounded, stated OTO. The Office reminds taxpayers that it will protect their rights and independently resolve their complaints as long as these fall within the OTO mandate.

Writer’s Thoughts;
Do you believe assistance from the Tax Ombud can compel SARS to correct the errors and return monies illegally collected from taxpayers? If you have any questions please comment below, interact with us on Twitter at @fanews_online or email me - myra@fanews.co.za.