As a taxpayer with an insurmountable mountain of tax debt owed to SARS, sleepless nights and grey hair are commonplace. With your quality-of-life fast deteriorating and stress levels increased, your key concern is finding someone, anyone, who can provide you with hope that SARS will grant some reprieve and write-off a portion of your tax debt.
Jashwin Baijoo
Head of Strategic Engagement & Compliance at Tax Consulting SA
With your quality-of-life fast deteriorating and stress levels increased, your key concern is finding someone, anyone, who can provide you with hope that SARS will grant some reprieve and write-off a portion of your tax debt.
It is in these desperate times, and when your mind is flooded with thoughts of impending financial doom, that you resort to desperate measures. What this means, is not always choosing the best in market specialists, and often ending up with a generalist 1-man show as your “saviour”, offering a guarantee of making your tax debt go away.
The term “tax debt” is fairly self-explanatory, and simply refers to a money duly owed to SARS, by a taxpayer, for a specific year / period of assessment, which amount the taxpayer agrees with. What is not so straightforward, is how can you get SARS to write-off a portion of money you actually owe to them; and the answer, is SARS’ Tax Debt Relief Mechanisms!
Breaking it down further, you have 2 options, namely the Deferral of Payment, and, more favourably, the Request for Compromise of Tax Debt.
A Deferral of Payment is quite simply put, a payment arrangement with SARS. What this means practically, is the entire tax debt amount is paid to SARS, but in monthly instalments, and includes interest and penalties.
The Compromise is aimed at aiding taxpayers to reduce unaffordable tax debt by means of a Compromise Agreement (“the Agreement”), which is entered into with SARS. Where SARS is approached correctly, and the taxpayer’s financial circumstances warrant it, a tax debt can be reduced, and the balance paid off in terms of the Compromise.
It is important to note that contrary to a lot of adverts seen in the market, no tax debt relief mechanism results in a 100% write-off of your tax debt, but paying something instead of everything is a clear win.
As beneficial as this type of leniency may sound, there are stringent legal criteria for a taxpayer to meet, before even being eligible to engage SARS in tax debt negotiations and have their tax debt reduced to a more affordable amount.
It is important to note that where SARS are not correctly legally engaged, SARS’ Debt Management Team, in conjunction with either the SARS Asset Forfeiture Team, or Sheriff of the Court, are empowered to initiate a number of collection proceedings against the non-compliant taxpayer, including, but not limited to:
It is the complexity, documentary burden to be discharged, and aggressive stance SARS have taken on legal collections, that necessitate you chose your very own “A-Team” to negotiate in your favour!
As your tax compliance is often a sensitive topic of discussion, it is integral that your team is headed up by a specialist tax debt attorney. Not only does this guarantee legal professional privilege, but also ensures you are correctly armed to legally take on SARS, and win!
Practically what can be seen in daily SARS engagements, is a strength on procedure and policy from SARS Officials, but where they are strong on internal protocol, they tend to fall short on legal aptitude. In the ideal world, SARS’ turnaround timeline would be honoured, however where they take longer than permissible, a legal letter placing them on terms often does the trick.
With the legal side covered, it is essential that your attorney work hand-in-hand with a seasoned accountant, knowing the ins and outs of financial reporting. This will ensure SARS’ documentary requirements are properly fulfilled and your case is stated in numbers and words, to your best advantage.
It must be noted that SARS have a laundry list of financial information to be submitted to even consider writing off your debt, and with time of the essence, in this case, “bigger is always better” as more hands on deck make for quicker resolution.
It is easy to be unaware of the full financial risk faced, when dealing with SARS, but it is important that taxpayers have an understanding when it comes to a tax debt; what it means, how it comes about and how SARS can legally reduce the amount you owed them!
Law abiding taxpayers who seek to address their tax debts are able to remedy their non-compliance and save their businesses by playing open cards with SARS. Enlisting the correct Tax Debt Negotiation “A-Team” will assist you in successfully navigating the intricacies of the tax debt relief mechanisms.
It is vital that taxpayers take action sooner rather than later, before SARS comes knocking, and ensuring this team comprises of specialist tax debt attorneys, fully backed by seasoned accountants and bolstered by a large tax practice is essential to staving off bankruptcy!
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