Editor: This is an extremely frustrating issue for many taxpayers. We wish there was some way to improve it. Alas the only solutions are for the taxpayer to go through due process. Just know that in the background SAICA and SAIT are trying to push SARS to sort this out.
We have been receiving a large number of complaints relating to SARS “policy” to delay paying tax refunds. We have experienced these challenges personally and we understand your frustration. Most of the problems that we have encountered fall into the following three categories:
- The taxpayer or tax practitioner submits all the supporting documentation required by SARS via Efiling. The case is resolved after a couple of weeks and a ‘completion’ letter received. The taxpayer expects to receive their tax refund within a week or two but this does not happen. Contact is made with SARS and the taxpayer / tax practitioner is told that there is a ‘special stopper’ on the account. The taxpayer is told that they have to come in personally with their proof of address, ID, banking details and all the supporting documentation used to complete their return. The reason provided for this is the high probability of fraud on the taxpayer’s account.
- Tax returns are submitted with there being no request for verification. Taxpayers then receive a verification request some weeks later. Supporting documentation has to then be uploaded to SARS and in the process delaying the release of a potential refund by 3-4 weeks.
- Taxpayers after meeting all compliance requirements find that they do not receive their tax refund. After enquiring with SARS they are told that their banking details need to be validated. The taxpayer then has to personally go into SARS to perform this process. This is particularly irksome where banking details have not changed and have been on the system for many years.
It is understandable that taxpayers / tax practitioners are becoming frustrated with ‘deferral procedures’ that do not seem to adhere to standard procedures. Many of the tax bodies have raised this matter with both SARS and the Tax Ombudsman’s Office, with one going as far as to suggest that the State may be borrowing money from taxpayers by delaying refund payments. SARS have however responded with ‘whilst it is understood that taxpayers have been inconvenienced with this process, SARS had to proceed accordingly in order to prevent possible fraud’.
SARS added that of the 3.5 million personal tax returns received to date only 5% were identified for verification of personal details. SARS have also suggested that in the majority of these cases the verification is necessary because of mismatches between third-party data and the information submitted to SARS (Note: this is an odd statement to make as in most of these cases ‘completion’ letters were sent to the taxpayer. If there were indeed mismatches why were assessments not raised?)
This matter is certainly not going to go away. Both SAIT and SAICA will be addressing this with SARS at future stakeholder meetings.