Evidence of practitioner involvement in eFiling hijackings

The South African Revenue Service (Sars) believes the crime of profile hijacking points to “pervasive cybercrime with global links”. Sars Commissioner Edward Kieswetter says the revenue service is – like all other financial institutions – under constant threat due to international cybercrime syndicates. 

He reacted to media reports over the weekend relating to a Johannesburg company that claims to have been the victim of profile hackers scheming the company out of a R20 million refund.

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Sars has investigated this matter and found no negligence or liability on its side.

“Sars will assist the company and all law enforcement agencies in any investigations that must follow to uncover the source of this tax crime,” Kieswetter said.

Systemic investigation 

Profile hackings have been top of mind in recent months, leading to a workshop organised by the Office of the Tax Ombud (OTO) to determine the extent of the problem.

The OTO has identified it as potentially systemic and received the go-ahead to investigate the alleged service failure of Sars to assist taxpayers timeously with their eFiling profile hijackings.

The ombud initiated the investigation after being inundated with complaints by taxpayers, tax practitioners and their industry bodies about the increased prevalence of profile hijackings and the disruption they cause. 

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Kieswetter said in a statement on Thursday that a key strategic objective is to build public trust and confidence in the organisation, which was lost during the years of state capture. 

“Sars has made great progress in this area and will certainly not want to lose the ground gained through criminal activity, whether it’s done from inside or outside the organisation.”

He welcomed the investigation initiated by the OTO. “Sars is cooperating with the OTO and looks forward to the recommendations that will be made on how best to combat the scourge of profile hijacking.”

Tax practitioner involvement

During a lunch hour webinar organised by The Tax Faculty, a senior manager of the OTO expressed their concern about the alleged involvement of tax practitioners in profile hijackings.

Talitha Maude referred to at least three cases that had come to their attention, where tax practitioners were allegedly claiming profile hijackings that turned out not to be. 

She said the OTO has been investigating some of the complaints received from taxpayers or tax practitioners because the information points to a problem with the Sars systems. 

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However, she referred to a case where a tax practitioner complained that his client’s profile had been hijacked.

During the investigation, it was confirmed that the taxpayer’s bank account details had been compromised. A refund was paid into an account that was not known to the taxpayer. The request was that Sars pay the refund back to the taxpayer. 

In the meantime, the taxpayer confirmed that their profile had been hijacked. They did not receive their refund and was told it had been paid into a particular bank account.

The taxpayer obtained confirmation from the bank that he does not have an account with the bank and requested that Sars pay the refund into the correct account.

However, following an investigation, Sars found that the return had been submitted by the same practitioner who claimed that their client’s profile had been hijacked. 

The return was filed from the practitioner’s computer and the bank details were updated by the practitioner.

Sars claims there was no profile hijack. 

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Quite disheartening

Theo Burrows, secretary-general of South African Tax Practitioners United (Satpu), said during the webinar it is quite disheartening that some practitioners are complicit in the hijackings. 

“Obviously, it needs to be dealt with. Taxpayers are being let down by the very people they need to rely upon,” he noted.

Burrows believes Sars should engage with the recognised controlling bodies to which these practitioners belong. 

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There are 24 000 registered tax practitioners, and the hope is that only a small minority are complicit. “But there should be none.” 

The first reports of increased profile hacking had already surfaced in 2021. The matter has gained momentum and has been the predominant topic on tax practitioner forums since April this year. Fraudsters are particularly active during filing season or when refunds are due to taxpayers. The annual Filing Season kicked off on 15 July.

This article was republished from Moneyweb. Read the original here