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Attention representative taxpayers: Here's how to avoid footing someone else's tax bill

by , 09 October 2013
The money in your bank account isn't totally under your control! That's right! The Tax Administration Act (TAA) allows SARS to take money from your bank account to settle another's tax debt if you're a representative taxpayer. Read on to find out how you can prevent this from happening to you...

If you've submitted a tax return for a client and have indicated that you're the representative taxpayer for the submitted return and that person hasn't paid his tax, watch out! SARS may come after you to collect the tax debt, warns the Practical Tax Loose Leaf Service.

The good news is you can avoid this heavy burden by following these tips.

Use these pointers to avoid footing someone else's tax bill

Tip #1: Be honest and disclose all relevant information on tax returns, financial statements and any records you're responsible for;

Tip #2: If your business or entity is being closed down, you as shareholder or member can be held responsible for your company's tax debt if your company has an outstanding tax debt and you've taken money out of the company;

Tip #3: Request a tax clearance once a year to ensure all your tax affairs are in order.

Tip #4: Don't put your name and details on a tax return if you're not the representative person and don't want to take full responsibility for the information submitted.

While the TAA says you'll be held personally (representative taxpayer) liable for your company's tax debt, you can avoid footing someone else's tax bill if you stick to the pointers above.

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