HomeHome SearchSearch MenuMenu Our productsOur products

Six ways to speed up your tax compromise process with SARS

by , 13 October 2016
Six ways to speed up your tax compromise process with SARSIt's become apparent over the past 12 months that either service delivery levels at some SARS branches are falling. Or there are many more taxpayers applying for tax compromises.

I say this because I haven't been able to successfully resolve a tax compromise without resorting to filing a complaint at the CMO.

In one instance, it has taken more than 12 months to resolve a tax compromise. This is despite 37 emails, submission of supporting documents four times, and finally a report to the CMO.

We've been promised a date 'this month'.

So, if you have a tax compromise request with SARS, here's why I think they are dragging their heels...

...................................................................................................
 
How Greg got R22 400 back from SARS for his company's bad debt...

Greg got R22 400 from SARS for his company's bad debt...

Discover how he did it so you can do the same and get money back from SARS now.
..................................................................................................


Why I think SARS is taking their time resolving your tax compromise
 
I have a sneaky suspicion that the reason for the sub-par service is because of the sheer volume of taxpayers applying for tax compromises.
 
Whether the delay is on the part of those in debt management, or their managers approving the application, or the fact that the compromise committee only sits once a month, it seems clear that SARS needs more employees in debt management.
 
We've seen a renewed effort from third party debt-collectors sending out emails and sms's and more emails and phone calls and yet more sms's to taxpayers demanding settlement of outstanding debts, be they R100 or R100 000.
 
Unpaid taxes, in most instances, are symptomatic of struggling businesses. So it's understandable that more taxpayers would want to apply for a tax compromise process. But I'm not convinced SARS was prepared for this as an effect of third party debt collection agencies calling taxpayers on their behalf.
 
So, if you're in a position where you or your business legitimately can't settle a tax debt, then you really should look at applying for a tax compromise.
 
But be careful, there are pitfalls, and the process is no longer a three-month exercise. But here's some advice on how to speed up the process…
 
..................................................................................................

 
How much time do you spend looking for useful tax information?

Do you need all the South African taxes analysed and explained in one easy location?

Now you can have all the information in one place: The Practical Tax Loose Leaf Service.
  • Over 500 pages compiled by our tax experts, comprising of:
  • All the definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
  • Case studies and practical examples that show you what elements you should consider for your taxes to be perfect.
  • Red flags you need to watch out for and the penalties you'll face if you don't respect them.
  • Sample templates at your disposal, ready to be filled in, customised and printed. 
You will also get free access to the accountingandtaxclub.co.za. Here you'll find questions and answers on any tax issues. You can also ask our experts a tax question.

Get your copy of the Practical Tax Loose Leaf Service now.

..................................................................................................


Six steps you can take to speed up your tax compromise process
 
Step #1: When you start the process, ask for a case reference number. If you end up having to file a complaint, you'll need a case number, else you'll need to jump through a few hoops before you're actually able to lodge a complaint.

Can't complain with no case number, can't get a case number because SARS isn't responding, can't complain about SARS not responding because you have no case number, ad infinitum. You get the idea – get a case number early!

Step #2: Communicate by email. It's vitally important to have a record of all interactions with SARS in case the CMO needs this. I've never been asked to provide this, but I've heard of others. With all complaints I've submitted, a CMO official is appointed, and this invariably gets things moving again a week or two later. No proof or other form of evidence is requested to support your complaint – I'm not sure this is a good thing.

Step #3: Respond concisely and quickly. Don't wait a week or two to get back to the official once they email you. You want to be prepared, and have information available for SARS when the request it. The Practical Tax Loose Leaf has all the information you need for your tax compromise. Get your copy here if you don't have one yet. 

..................................................................................................

Are you committing Financial Suicide?

Do you...
  1. Structure your salary to pay less tax?
  2. Claim tax deductions on your expenses?
  3. Rely on your accountant or tax consultant to do your taxes?
  4. Charge Vat?
  5. Pay tax provisionally?
If so, then you're just another one of several companies that could be committing financial suicide. Find out if you are here
 
..................................................................................................


Six steps you can take to speed up your tax compromise process cont...

Step #4: Reject unreasonable turnaround times (or be prepared for them). You'll notice after you lodge a complaint for a tax compromise that the official appointed to handle your application will email you back a week later and ask you to submit brand new, up-to-date information in three or four working days. Email the SARS official back, tell them four days turnaround is unrealistic, and ask for 21 working days (standard turnaround).

Step #5: Always offer a Rand amount for settlement. Some businesses will have large assessed losses that can forfeit which will cover the outstanding tax debts. SARS wants money in the bank though, so always make a notional offer. In one case I handled, a taxpayer had R1.9 million in outstanding tax debts as a result of fraud in 2009. But they also had an assessed loss that covered this amount by double. SARS wouldn't accept the offer of just a portion of the assessed loss. So we offered them R20 000 and they accepted and approved the compromise.

Step #6: If you fail, try again. If SARS rejects your tax compromise, there's nothing in the Tax Admin Act stopping you from immediately launching another application. Consider why the application was rejected, and see if you can provide evidence in defence of that reason in your next application. 

There's a greater number of taxpayers who can't afford to settle tax debts, which is symptomatic (in most genuine cases) of an economy not fully recovered yet. The tax compromise process seems to be more popular in recent months as more taxpayers find out about this option for settling taxes.

For the A-Z of tax compromises and how to apply for one, turn to chapter T18: Tax Compromise, in your Practical Tax Loose Leaf.


Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>