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If your tax debt compromise application is successful, here's what'll happen before finalisation occurs

by , 18 September 2014
A successful tax debt compromise happens when you and SARS both agree that parking all or some of the tax debt will give SARS the most amount of money possible.

Getting news that SARS agrees to compromise your tax debt is the best thing ever because it means SARS will treat your debt as no longer due and payable and this means you'll escape penalties, incessant phone calls from SARS' collections department and further action from SARS, like audits.

But before you celebrate, there's something you should know: On a successful tax compromise, three events must happen before the finalisation occurs.

Read on to find out what will happen...


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On a successful tax compromise, three events must happen before the finalisation occurs


#1: SARS must give you a written undertaking.

According to the Practical Tax Loose Leaf Service, a senior SARS official must sign a letter outlining the results of the tax debt compromise. This letter must state the total tax debt amount, the settlement amount and the debt SARS is parking.

Make sure the letter also has conditions of the compromise. It must state SARS will not collect the compromised tax debt as long as you stick to the conditions attached to the tax compromise.

#2: You must sign (if required) and accept the letter of undertaking and agree to the terms of the compromise.

#3: You'll only pay the settlement amount once you receive the undertaking from SARS. Payment is due within 30 days, or any other period SARS specifies in the letter of undertaking.

Make sure the payment reference number is clear. If SARS hasn't given you one, contact the SARS official immediately and ask him to give this to you.

When all these three things have taken place, the tax debt compromise agreement will be effective and you must stick to your end of the deal so SARS doesn't come after you.

PS. Find out how to take the hassle out of tax, audit-proof your business and make the Receiver your friend!


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