Four things you need to know about a tax debt compromise
compromise is a request to SARS asking it to 'park' any outstanding tax
debt, if you're in financial distress.
By parking the debt, SARS will agree not to demand payment, it treats your debt as no longer due and payable. Whether SARS will park everything or only part of a tax
debt will depend on your financial situation and how much SARS can realistically recover.
You can apply for a tax
debt compromise at any time during a tax
year and you must do so as soon as you realise you can't pay any outstanding tax
debt to SARS.
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Following the audit you get an assessment saying you owe penalties of 200% and interest on all the money you owe, which means you will have to liquidate your business!
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Any taxpayer with an outstanding tax
debt can apply for a tax
compromise. This means individuals, companies, close corporations, Trusts, partnerships, cooperatives and non-profits can apply.
There aren't any prescribed SARS returns or forms you must use for a tax
compromise. You must send SARS a letter to apply for a tax
You'll find a sample letter you can use in your copy of the Practical Tax Loose Leaf Service
After your application, SARS will review your financial information to see if the compromise is the best way to deal with the outstanding tax
debt. If so, it will grant the compromise.
Here's the bottom line: A tax debt compromise
is your lifeline if you're battling with tax
Use it to your advantage to minimise the risk of the debt coming back to haunt you in future.
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