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SARS Reassures Compliant Taxpayers

by Lorys Charalambous,, Cyprus

13 July 2010

The South African Revenue Service (SARS) has reassured taxpayers that the deduction of unpaid administrative penalties from salaries and bank accounts from September this year, announced when launching the 2010 tax season earlier this month, will be a last resort that affects only a minority of non-compliant taxpayers.

It confirmed that compliant taxpayers who submit their tax returns on time and pay what is due to SARS will not be affected. The people who are affected by administrative penalties are those who for a number of years have failed to submit returns.

The administrative penalty system became law on January 1, 2009, after extended public consultation in 2008. In October last year, SARS warned taxpayers with multiple outstanding returns that they would be affected by the first phase of the system’s implementation. These taxpayers were given a final opportunity to correct their non-compliance before penalties were imposed.

In January this year, SARS issued the first round of penalties to approximately 230,000 taxpayers who had returns outstanding for multiple years. However, approximately 180,000 taxpayers have failed to respond to the penalty notices.

Non-compliant taxpayers were warned again at the launch of the tax season, that in the event of penalties not being settled, their employers would be appointed as agents to deduct and pay over the outstanding administrative penalties due to SARS.

SARS will be communicating with the affected employers, informing them of the legal framework and process to deduct the outstanding penalty from the taxpayer’s salary, depending on the circumstances of the taxpayer and based on the most recent information SARS has available.

At the same time, SARS has, before appointing an employer to deduct the outstanding penalty, built into the process an opportunity to apply for remission of penalty and an opportunity to lodge an objection. If a taxpayer has requested the remission of an administrative penalty, collection steps will generally not be taken until SARS has dealt with the request.

However, if the response from non-compliant taxpayers still remains unacceptable, SARS will be forced go to the next step in the process and extend the appointment of agents to banks holding funds on behalf of these taxpayers.

TAGS: South Africa | compliance | tax | tax compliance | law | enforcement | penalties | individual income tax | Africa

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