Groundswell of disgruntlement as ordinary taxpayers badgered by SA Revenue Service
From tax refunds revised to tax debt to final demands, sometimes for tax returns dating back several years, and system glitches failing to record appeals and disputes, ordinary taxpayers recount the capriciousness of the South African Revenue Service.
By any account, experiences with South Africa’s tax collector — shared by readers online and on social media platforms — point to stressful, frustrating and irksome interactions with SARS that have left ordinary taxpayers floored.
That’s the overwhelming response to a personal reflection piece by this reporter on how, although a tax refund was paid after verification in late December 2021, further “enforcement” followed in mid-February, with additional supporting documents to prove the validity of receipts already submitted.
The SARS approach to ordinary taxpayers of “guilty until you prove otherwise” is raising hackles, particularly in the absence of clear, public and quantified tax action against booze, tobacco and other smugglers, politically connected tenderpreneurs and the beneficiaries of State Capture.
Among the responses, a couple* on pension recounted how a tax refund, paid at the end of December 2021 after a verification process, was followed by a demand to pay more than R9,000.
Their request to SARS for reasons and details on why a tax refund was reversed into a tax demand has not yet been answered. Emails had to be written after it proved impossible to log a dispute and file an appeal on the SARS system.
A medically boarded public servant* recounted how SARS, instead of paying a refund, demanded payment from the pension received from the Government Employee Pension Fund (GEPF).
In one case related to a previously incomplete tax return, a demand was adjusted from R23,000 to R7,000 after correspondence with the SARS debt recovery office — and after some previously missing information was provided to the tax collector.
This particular taxpayer* had not known info was missing; this only emerged now, with the demand.
It is all about the question of approach. While the SARS way seems taxpayers are guilty unless they prove otherwise, this may well, in the coming months and years, erode compliance and public goodwill, and boomerang badly in South Africa’s deteriorating socioeconomic conditions.
A set of detailed questions — including the impact of SARS’ attitude on public goodwill and tax action against State Capture beneficiaries — was emailed to the tax collector on Thursday, 24 February. Even though the requested response time — end of Monday — was extended to lunchtime Wednesday, 2 March, no responses had been received by 6pm.
But SARS Commissioner Edward Kieswetter is on Twitter record regarding the original personal reflection piece.
“It is regrettable when journalists use the privilege of their platform to ventilate their personal tax affairs. I suggest that this matter be dealt with privately to maintain taxpayer confidentiality and the integrity of the process,” he tweeted.
It is regrettable when journalists use the privilege of their platform to ventilate their personal tax affairs. I suggest that this matter be dealt with privately to maintain taxpayer confidentiality and the integrity of the process. @dailymaverick @SARStax https://t.co/WvFKDg2fRE
— Edward Chr Kieswetter (@EdKieswetter) February 21, 2022
Readers and social media users had a different take, including lawyer Richard Spoor, who responded to the SARS Commissioner:
“Fact: you (SARS) spent 90% of your time harassing people who fill in their forms and jump through the hoops for you. Chasing big time criminal tax evaders is only a sideshow (Come this side and I will tell you a few stories about it)…”
Also on that timeline, Twitter user Meepo complained, “I’m now in my 3rd 21 day waiting period for a refund that I was supposed to receive last year… Mr Kieswetter, I think you guys are missing the plot.”
That got a response from @SARStax asking details be sent to [email protected]. It’s an email address often cited by Kieswetter when taxpayer issues pop up on his Twitter timeline.
Online responses included one Daily Maverick reader* recounting how, after waiting for two hours to speak to a consultant, the promised corrected status update failed to materialise.
“I too am a believer in paying my taxes, but come on SARS, you need to play your part too, stop harassing the middleman and target the real dodgers.”
Self-confessed “scrupulously honest” provisional taxpayer, Daily Maverick reader Stalker*, was early submitting the January tax return and received a small refund — only to receive a R2,000 administrative penalty for late submission. While SARS acknowledged the mistake in a telephone call, rectifying this could only be done through the dispute process.
“Suffice to say, that this was also prolonged!!! Eventually, I had the penalty reversed. However, any goodwill has long since evaporated.”
A similar experience by another reader* remains stuck in the so-called Request for Remission process. “‘Remission’ — what a way of describing redress of an admitted SARS mistake! I hate to think how many hours of searching the website and waiting on the phone I’ve spent on trying to correct a SARS error…”
A call-out to Daily Maverick Insiders to share their SARS experiences saw similar accounts of receiving penalties for, ironically, submitting returns before the statutory deadline. For one respondent, the R500 penalty was “not worth the dispute”.
Coincidentally, of the 171 responses to this call-out, fewer than 10 indicated they had no problems. “I want to compliment SARS on their sterling work and huge improvement in my personal tax return experience” was the only positive comment.
Most recounted bullying, feeling targeted for repeat audits — even though previous audits showed no irregularities — and tax demands going as far back as 2014 and 2013, well beyond the five years taxpayers are required to keep their documents.
Repeat audits and verification, with repetitive demands for documents that increase administrative burdens, also emerge in readers’ responses to the personal reflection piece.
“I received my completion letter and notification that there was no change to my assessment. Two days later, I received, instead of my awaited refund, a notification that I had been flagged for audit, with a new case number.
“It took almost four months before the process was complete — still no change to the assessment,” according to one Daily Maverick reader* in an experience echoed by another reader running a small business. “Verifications are completed with nothing found and next month, same story.”
Reader Love JHB South* commented how SARS was auditing the same taxpayers, year in and year out, even though no discrepancies are ever found.
“SARS needs to update its IT department, as they continue to send out ‘system driven’ letters, which are incorrect… We need a big overhaul here, and no more emails to clients with incorrect information on them.
“SARS needs to leave the easy targets already on their database, and start adding the wealthy, non-tax paying individuals and businesses.”
That the pressure is on SARS to increase tax collections is clear, given the increasing joblessness, hunger and poverty in South Africa — Covid lockdown restrictions hit Day 707 on Thursday — and the domestic R308-billion-plus annual debt service costs.
That was pretty much clear from Budget Day on 23 February, when Finance Minister Enoch Godongwana welcomed R181.9-billion in additional — and previously unexpected — tax revenue, but also cautioned this could not be relied on as commodity price windfalls are temporary.
A few days later, Kieswetter told Business Day how SARS efforts had contributed some two thirds to the additional tax collections, not only a commodities windfall or overall economic recovery.
It’s an echo of what the tax boss also told others, like the Money Show.
And that meant tax compliance was now up to 64.5% from 62%.
According to Business Maverick, SARS has selected one in five personal income tax returns for verification, which in turn led to final demands in favour of the tax collector in about six out of 10 cases.
“That means, if we had not gone through the verification procedure, those taxpayers would have received refunds unlawfully,” Kieswetter said in an interview, adding later:
“Sometimes, the process may take longer than 21 days, but preventing fraud and saving the country money justifies the work we do.”
That work included re-establishing a high-value unit — a similar unit was made defunct when Tom Moyane was the tax boss — with a view to looking beyond income towards the overall wealth base, including investments both overseas and local, properties and such.
Although Kieswetter told journalists at the pre-Budget speech briefing that progress is being made, also in corruption investigations, the work towards this might be “invisible”.
Some of that “invisible” got a little more visible when, on 26 February, the Hawks said in a statement that three men appeared in the Pretoria Specialised Commercial Crimes Court for R10.2-million VAT fraud.
A day later, a SARS statement announced the attachment of assets of two diagnostic radiologists in relation to a R52-million tax debt after their application for a compromise was declined, according to a SARS media statement on 25 February.
Section 200 of the Tax Act allows SARS to “compromise”, effectively to lower due debt, “to secure the highest net return from the recovery of the tax debt”.
In that statement, Kieswetter said SARS wanted to make compliance easy and simple for taxpayers, giving them clarity and certainty on obligations.
“We regard the overwhelming majority of taxpayers as honest and willing to comply… However, wilful and criminal non-compliance from whatever source, will not be tolerated. SARS will use every legal instrument at its disposal to make it hard and costly for such taxpayers and traders.”
However, judging from readers’ and social media users’ accounts, ordinary taxpayers are more likely to experience the tax collector throwing the book at them. Never mind tax compliance. DM
*The identity of readers and others are known, but withheld to prevent unintended consequences.
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