‘Sars could attach your assets’ – expert warns owing taxpayers

Your tax debt could cost you your most prized possessions, if you don’t give the taxman what’s due to him.

The South African Revenue Services (Sars) recently announced it would be ramping up debt collection on outstanding accounts from owing taxpayers.

“Sars is determined to make it hard and costly for taxpayers who willfully fail to meet their obligations,” it said in a statement.

Sars’ secret weapon? The revenue collector’s Compliance Programme uses data, artificial intelligence (AI) and machine learning algorithms to counter criminality and non-compliance.

“These systems also ensure that no legitimate refunds are denied, while preventing impermissible and fraudulent refunds.”

Thus far, Sars has collected R91.3 billion debt from 2.6 million cases – including R420 million from 895 000 outstanding returns.

READ MORE: Economists say they are confident in Sars

‘Sars can attach your assets’

Latita Africa Tax Legal Specialist, Thomas Lobban explained the rules of engagement, adding there were honest ways to get through the tax turmoil.

“If you are in debt with Sars or received a notice of final demand, there’s no need for panic,” Lobban said.

He advised taxpayers to take immediate action to remedy the situation before the the taxman takes drastic collection measures.

“That includes collecting the tax debt from third parties, like your employer, your bank, your investment broker or anyone else who owes you a buck,” Lobban explained.

“Sars is also empowered, where necessary, to attach your assets in order to collect on the tax debt,” he added.

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Denial is detrimental

While ignoring reminders from Sars may seem like the convenient thing to do when faced with a hefty debt, it could land you in a deeper financial hole.

If you happen to be in trouble with the taxman, Lobban advised simply accepting your mistakes, and seeking the right assistance.

“You’ve either been trying to do it all yourself – and you’ve been getting it wrong. Or, you’ve been receiving poor advice and bad service from a tax advisor who’s not up to speed on tax or tax law themselves,” he said.

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Deferment is key

If you’re faced with a steep tax debt, Lobban advised reaching out to Sars requesting to defer your debt.

This would entail working out a payment plan that would enable you to pay off your debt in reasonable instalments.

“Deferment is also handy in some cases where you intend to dispute the assessment, because of Sars’ “pay now, dispute later” policy – it can cushion you from an immediate and possibly unaffordable full settlement,” Lobban said.

‘Compromise the debt’

Alternatively, if you qualify, you can enter into a tax debt compromise agreement with the revenue collector in terms of section 200 of the Tax Administration Act.

“This allows you to reduce your tax liability, sometimes substantially,” said Lobban.

However he explained that the compromise process involves an invasive assessment – which entails Sars digging into every aspect of one’s finances and personal wealth.

“Any of these situations are best handled through a tax advisor with legal muscle to spare, and a firm grasp of Sars’ often confusing and complex debt resolution processes.

“This is especially the case where there are other potentially problematic issues the taxpayer is facing,” Lobban concluded.